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THE NAND AND JEET KHEMKA FOUNDATION

Policy paper: 001/2013

May 2013 Authored by SELCO Foundation

Please address comments to Surabhi Rajagopal: [email protected]

Energizing Livelihoods: Infusion of renewable energy in rural livelihoods

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Energizing Livelihoods: Infusion of renewable energy in rural livelihoods

Contents

Abbreviations ............................................................................................................................................. 3

List of Tables and Boxes ........................................................................................................................... 3

Layout of the paper .................................................................................................................................... 3

I. Executive Summary ........................................................................................................................... 4

II. Overview of NRLM ........................................................................................................................... 5

1) Taking Stock at the State Level ............................................................................................. 6

2) Energy Linkages to Rural Livelihoods .................................................................................. 6

III. RE in Livelihoods: Value Chain Based Approach ......................................................................... 7

1) Agriculture and Animal Husbandry ..................................................................................... 8

a. Paddy Farming ...................................................................................................................... 8

b. Dairy Farming ..................................................................................................................... 11

2) Micro, Small and Medium Sized Enterprises (Unorganized Sector) .................................. 13

a. Small Restaurants and Local Eateries ................................................................................. 13

b. Mechanics and Mobile-Phone Repair Shops ...................................................................... 15

3) Energy Centers and Entrepreneurs ..................................................................................... 17

a. Products and Services ......................................................................................................... 17

b. Financing, Delivery models and Training .......................................................................... 18

IV. Recommendations for improving the ecosystem under NRLM ................................................ 19

V. Conclusion ........................................................................................................................................ 21

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Abbreviations

AP: Andhra Pradesh

BRLPS: Bihar Rural Livelihood Promotion Society

DRI: Differential Rate of Interest

ITI: Industrial Training Institute

KMF: Karnataka Milk Federation

MDGs: Millennium Development Goals

MoRD: Ministry of Rural Development

MSME: Micro, Small and Medium Enterprises

NABARD: National Bank for Agriculture and Rural Development

NRLM/NRLP: National Rural Livelihood Mission/ National Rural Livelihood Project

RE: Renewable Energy

RRB: Regional Rural Bank

RSETI: Rural Development and Self Employment Training Institute

SGSY: Swarnajayanti Gram Swarozgar Yojana

SHG: Self Help Groups

SRLM/SRLP: State Rural Livelihood Mission/ State Rural Livelihood Project

TN: Tamil Nadu

WB: World Bank

List of Tables and Boxes

Table 1: Timeline of National Rural Livelihood Mission Phases

Table 2: Ecosystem-related recommendations for NRLM

Figure 1: National Rural Livelihoods Mission in Context

Figure 2: Representation of BRLP’s main programmes

Figure 3: Value Chain of Paddy Farming

Figure 4: Value Chain of Dairy Farming

Figure 5: Value Chain of Small Restaurants and Local Eateries

Figure 6: Value Chain of Mechanics and Mobile repair shops

Figure 7: Products and services accessible through Energy centers

Figure 8: Ecosystem for Energy centers to exist within NRLM

Box 1: Opportunity in Solar water pumping

Box 2: Opportunity in Milk testing and weighing

Box 3: Opportunity in Battery charging and soldering

Layout of the paper

The paper begins with an outline of the National Rural Livelihood Mission (NRLM), including an understanding of

Mission’s implementation in two states- Bihar and Karnataka. Based on the energy needs of prime livelihoods practiced

in each of these states, appropriate, implementable renewable energy interventions are suggested. The energy needs

have been analysed from a value chain point of view. Largely, the livelihoods are categorized into Agriculture and

animal husbandry, Micro, small and medium enterprise sector and Energy centers and entrepreneurs. To address the

energy needs of each of these livelihood categories, a range of implementable renewable energy technologies as well

as financing and delivery models are discussed. The paper ends with a list of recommendations that would enhance the

ecosystem and aid deployment of renewable energy interventions under NRLM.

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I. Executive Summary

Over the last decade, deficiencies in conventional power generation, losses in distribution and the hurdles of extending

power to remote areas, have made it increasingly clear that a strategy of massive grid extension is no silver bullet

solution to rural electrification1. These challenges prevent poorer households and rural enterprises from accessing

clean and reliable modern energy services. They constitute not minor inconveniences but significant barriers to rural

economic and social development. The lack of reliable electricity forces rural communities to spend significant amounts

of money to meet their energy needs. As per 2009-2010 data, fuel and light constitute the 2nd

highest expenditure

items after food in rural areas2. It is widely recognized that reliable electrification enables livelihood generation3. This

combined with the increase in the number of off-grid energy enterprises in the country creates a huge opportunity for

rural livelihoods to benefit from independent, decentralized, renewable energy solutions.

The National Rural Livelihoods Mission (NRLM) of the Government of India seeks to use grass-root level institutions to

bring about improvements in livelihoods, including self employment and skilled employment4. These improvements will

ideally provide a means to increase income and alleviate poverty. This aspect of poverty alleviation is the main goal of

the mission which will in turn help meet the Millennium Development Goals (MDGs). In addition to enhancing

livelihoods, the access to energy is considered critical part to meeting MDGs5. The study is a first step in gaining a better

understanding of this programme and the existing energy barriers within the rural livelihood sector. It highlights the

potential for linking sustainable energy solutions to support certain rural livelihoods and provides a framework by

which these can be implemented on the ground.

This paper seeks to capture the overall scenario of the mission and then narrow down on possible interventions in

certain livelihoods prevalent in two sample states – Bihar and Karnataka. These states were chosen for greater analysis

based on the differences in their stage of implementing the mission as well as the inherent differences in their

ecosystems. The goal is not to compare the progress in these states but to suggest appropriate financing and delivery

mechanisms for Renewable Energy (RE) interventions within their ecosystems.

A value chain based approach is used to understand the potential for RE interventions and a subset of livelihoods have

been chosen to suggest such interventions. These suggestions related to business models and financing can, however,

be applicable beyond the specific livelihoods mentioned. The livelihoods are divided into three large categories and

interventions covering technology, financing and delivery models are suggested for each category.

The first category deals with Agriculture and animal husbandry that are traditionally recognized rural livelihoods

and have been given significant attention in most states.

The second category brings up examples from the unorganized Micro, Small and Medium Enterprise (MSME)

sector that plays a supporting role to other livelihoods and employs more than 100 million people across the

country6. Despite its significance in the rural economic system, it has received little or no mention in NRLM and the

state rural livelihood projects.

The third category is Energy centres and entrepreneurs that form part of a framework to integrate the RE efforts

across all other livelihoods and provide stability to the RE portfolio within rural livelihoods.

The paper ends with a set of recommendations to improve various aspects of the ecosystem including financing,

training, support for entrepreneurs and so on. While these are not directly linked to RE interventions, they affect the

implementation of any project under the NRLM framework.

1 Narula, K., Nagai, Y., & Pachauri, S. (2012). The role of Decentralized Distributed Generation in achieving universal rural electrification

in South Asia by 2030. Energy Policy, 47, 345–357. 2 National Sample Survey Office (2011). Level and Pattern of Consumer Expenditure 2009-2010. NSS Report no: 538, National Sample

Survey Office, New Delhi. Available at: http://mospi.nic.in/Mospi_New/upload/NSS_Report_538.pdf, accessed on 12/06/2013 3Cabraal, R.A, Barnes, D.F, Agarwal, S.G (2005), Productive Uses of Energy for Rural Development, Annual Review of Environment and

Resources (30): 117-144, Available at: http://siteresources.worldbank.org/EXTRENENERGYTK/Resources/5138246-

1237906527727/5950705-1239304688925/productiveusesofenergyforrd.pdf, accessed on 12/6/2013

5 United Nations Development Programme (2013). Focus areas- Environment and Energy, Available at:

http://www.undp.org/content/undp/en/home/ourwork/environmentandenergy/focus_areas/sustainable-energy.html, accessed on

12/06/2013 6 Prime Minister’s Task Force, Government of India (2010), Report on Micro, Small and Medium enterprises, Government of India.

Available at: http://msme.gov.in/pm_msme_task_force_jan2010.pdf, accessed on 12/06/2013.

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II. Overview of NRLM

The basic objectives of the Mission may be summarized as follows7:

Alleviation of poverty

Promoting diversified and gainful self-employment and wage employment

Ensuring sustainable income increase from the above

Creation and use of strong grass root level institutions as a facilitator

The timeline and the phases in which the Mission was implemented on the ground is summarized in the table below.

Table 1 – Timeline of National Rural Livelihoods Mission Phases

Timeline Project Details

2006- 2007

Restructuring existing Livelihoods programme – Swanajayathi Gram Swarozgar yojana (SGSY)

World Bank funded project in 4 States to restructure their livelihoods programme

States chosen included Bihar, AP, TN, Kerala

2010 National Rural Livelihoods Project (NRLP)

World Bank funded ‘proof of concept’

NRLP in 13 states (including Karnataka as well as previous 4 states)

In each state, work undertaken in a subset of districts/limited number of blocks

2011 National Rural Livelihoods Mission (NRLM) Launched by Government of India

Mission includes remaining 16 states as well Scale up of activities in NRLP states to all districts

Begin work in non-NRLP states

Figure 1 – National Rural Livelihoods Mission in Context

7 Ministry of Rural Development (2009). National Rural Livelihood Mission- A fresh lease of life for the rural people living below the

poverty line. Press Information Bureau, Government of India. Available at: http://pib.nic.in/newsite/erelease.aspx?relid=52423, accessed

on 12/06/2013.

Ministry of Rural Development(MoRD)

Rural Livelihoods programmes

2006 - Swanajayathi Gram Swarozgar yojana (SGSY)

2011 - SGSY restructured into the National Rural Livelihoods Mission

2010 National Rural Livelihood Project (NRLP) World Bank (WB) support for Pilot

in 13 states

Set 1: 2007 WB directly engaged with states - Bihar, TN, AP, Kerala

Example - Bihar Rural Livelihood Promotion Society (BRLPS/ Jeevika)

Set 2: Included into WB Pilot in 2010 (still re-structuring)

Example - Karnataka (to be named Sanjeevani)

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1) Taking Stock at the State Level

Under NRLP, states have been given the autonomy to create individual plans. The states coordinate with a National level mission monitoring unit mainly for larger level (non-binding) policy guidance. Karnataka and Bihar have been chosen for greater analysis based on differences in the stages of Mission implementation as well as inherent differences in their ecosystems. There is a recognition that even with similar livelihoods, the manner in which the problem is addressed will differ based on the specific ecosystem in the state. Bihar: In Bihar which began the restructuring process early in 2007 considerable progress has been made till date. Operating as a registered society, the Bihar Rural Livelihoods Promotion Society (BRLP) model is focussed on

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Direct involvement: Community mobilization and capacity building alongside credit linkage through commercial banks and Regional Rural Banks (RRBs). A key aspect of this micro-credit linkage under BRLPS is the creation of Self Help Groups (SHGs) as the main interface with people.

Indirect involvement: The ‘social security/ welfare’ component that supports improvements in food security, health, general well-being and recognizes them as critical inputs in the larger goal of improving livelihoods. For livelihood promotion, the BRLPS is primarily dependent on partners to carry out the activities under each livelihood stream.

Figure 2 – Representation of BRLP’s Main Programmes

Karnataka: The project in Karnataka is currently under the State department of Rural Development and Panchayat Raj. As of today, the Karnataka project is still in the phase of internal resource building and has not begun any field implementation. It is currently engaged in creating a livelihoods map that will capture the details of various livelihood activities being undertaken in Karnataka, with a focus on 20 blocks in 5 main districts, namely Gulbarga, Mysore, Tumkur, Dharwad and Belgaum. Over time, other districts and blocks will also be included under the project. As of now, the plans are to roll out their projects through existing SHGs created by NGOs and other ministerial programmes for women’s development or watershed development. If implemented, this would be a positive move as it avoids a duplication of effort and capitalizes on existing resources in livelihood promotion.

2) Energy Linkages to Rural Livelihoods

With reference to livelihood improvement or rural development, ground realities suggest that most plans are created based on the assumption that energy is accessible and reliable. Making a clear link between energy access and livelihood improvement can help change the way programmes are planned. This will ensure that energy is not assumed

8 Jeevika- Bihar Rural Livelihoods Promotion Society (2013). About us- Overview and Objectives, Bihar Livelihoods Promotion Society

website, Available at: http://brlp.in/about.php, accessed on 12/06/2013.

BRLPS

Capacity Building

(Direct Involvement)

SHG Formation

SHG Training on Group dynamics, Credit management

Micro credit Linkages

(Direct involvement) RRBs and Commercialized Banks

Social Security

(through partners)

Food security, Health, Solar lighting, Education etc.

Livelihood Promotion

(through partners)

Agriculture, Dairy, Bee keeping, Fisheries, Arts and Crafts etc

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to be available but is integrated into the plan at an early stage. Rural and remote areas across the country still reel under heavy power failures that worsen in the summer

9. When such an energy scenario is tied to livelihood promotion,

it results in a heavy reliance on fossil fuels such as diesel and kerosene. Not only are these environmentally unsustainable, they are also expensive and would eat into any additional income generated by way of livelihood promotion activity. Unreliability of the grid in certain areas and complete lack of access to the grid in others justifies the need for an independent, reliable source of energy to meet local demands. At the National level, under NRLM guidelines there is a section on Environmental Management Framework10. This would be an ideal section for inclusion of guidelines on the use of renewable energy solutions to promote livelihoods. However, for such a guideline to be introduced, the demand must first be made by the state. Either a state must show keen interest in RE or must undertake a pilot project that serves as a proof of concept for replication. It appears that for uptake of RE interventions, a customized implementation plan for 1-2 states can set a good precedent to attract interest from other states. This paper attempts to make this possible by creating a framework that can help states identify the RE potential in livelihoods and implement appropriate solutions. Under NRLP, states have the flexibility to create their plans based on the need and requirements in the area. While this is being done in the process of livelihood mapping for each state, recognizing the strengths of the local economy and the gaps in the ecosystem (technical, product-related, financial, human resource) is also critical in customizing the programme to the needs of that area. Community mobilization efforts in areas with existing networks should capitalize on them rather than reinvent the wheel. Credit linkages must also be leveraged depending on the need in certain states. In areas where local economic activity is strong and strong financial players exist, the focus must be on strengthening the linkages. Karnataka, for example, can capitalize on an established network of financial institutions to strengthen credit linkage to grassroots level entrepreneur from rural background to access seed financing for his small scale retail business. With specific reference to energy, off-grid energy enterprises with a strong field presence and implementation experience are well suited to suggest interventions that are practical and bankable (financially viable). Enterprises such as those constituting the Renewable Energy Working Group (REWG)11 operate through rural networks and implement solutions to meet the needs of households and small businesses. Most solutions being implemented are combinations of technology, financing and delivery. Similar solutions can be planned into the Mission to address energy constraints for specific rural livelihoods.

III. RE in Livelihoods: Value Chain Based Approach

Beyond the issues of community mobilization and capacity building, the State-level Rural Livelihood Mission (SRLM) bears the onus of implementing or supporting projects that have a large component of actual livelihood promotion. This is a critical aspect to the larger success of the state level intervention. The livelihood categories that we have identified for this paper are a subset of all livelihoods being practiced in each state. However, the specific livelihoods elaborated here are common to both Bihar and Karnataka, with significant percentages of households in both states engaged in them. The goal was to create a framework that allows for integration of replicable RE interventions combines technology, financing and business model customizations within each state’s ecosystem from both the demand and supply side. The approach is based on understanding the livelihood value chain and determining which renewable energy interventions could add value in particular phases of the chain. It provides a better understanding of the varied energy needs at each level within the production process. The value chains have been created based on insights and information from the field. The focus has been on the following three large categories of rural livelihoods –

9 Mukherjee, S. (2011). "Report paints dark picture of power scenario in villages." Business Standard. Available at: http://www.business-

standard.com/article/economy-policy/report-paints-dark-picture-of-power-scenario-in-villages-111102100095_1.html, accessed on

20/06/2013.

10 Government of India (2011), Environment Assessment and Environment Management Framework for the National Rural Livelihood

Project (NRLP)- Final Report, Government of India. Available at: http://aajeevika.gov.in/nrlm/NRLP-EA-EMF-Final-Main-Report.pdf, accessed on 12/06/2013.

11 REWG is an informal network of social enterprises delivering clean energy solutions in rural areas that has come together to speak in a

unified voice and constructively engage with the various stakeholders in the eco-system, especially policy-makers. The initiative is

currently being supported by the Khemka Foundation.

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Traditionally recognized rural livelihoods- Agriculture and Animal Husbandry

Large employer of rural people - Micro, Small and Medium enterprises sector

Integrator of sustainable energy interventions- Energy centers and entrepreneurs.

In this framework, the last category of livelihoods will act as the integrator to ensure functioning of RE in the other two categories. This category brings the two-fold benefit of creating a new set of livelihood opportunities in rural areas, while simultaneously providing a platform that can support RE interventions introduced in other livelihood categories.

1) Agriculture and Animal Husbandry

This category has been the primary focus of SRLMs and covers two major livelihoods – Paddy farming and Dairy farming. Both Karnataka and Bihar are among the top 10 states in India for paddy production

12. Although there are

other crops grown in both states, for the purposes of this analysis paddy has been chosen. Many of the RE interventions proposed below are, however, applicable to other forms of crop cultivations as well. Within animal husbandry, dairy farming stands out as a prominent livelihood, albeit supplementary, applicable beyond the boundaries of these two states as well.

Technology Interventions

a. Paddy Farming

Within agriculture, there is a focus on paddy farming - a major occupation both in south Karnataka as well as a number of districts in Bihar. The value chain of paddy farming as depicted below consists of 4 phases beginning with the pre-production and ending with processing. During the pre production, the land is tilled and prepared for the planting of saplings. The production process is followed by processes such as threshing and dehusking that involve separating the grains from the straw and removing the chaff off each grain to make it edible. The final phase of agricultural processing to convert the grain into flour may or may not occur depending on needs of the producer. The constraints and possible ways of addressing the same are detailed below.

Figure 3 – Value Chain of Paddy Farming13

Phases in the value chain

Pre-production (Tilling)

Production (Planting including transplanting, Growing)

Post Production (Harvesting, Threshing, Dehusking)

Local Value Addition (Agro processing, use of agricultural waste)

Constraints / Risks

a. Lack of water availability

b. Destruction of prepared land by wild animals

a. Lack of Water availability

b. Usage of diesel for sprayers

c. Destruction of crops by wild animals

a. Lack of appropriate machinery

a. Lack of power for local milling and grinding

b. Utilization of agri waste

RE Interventions

a. Solar water pumping

b. Solar Fencing

a. Solar water pumping b. Battery packs for

Sprayers c. Solar Fencing

a. Pico hydro powered hulling

a. Local pico-hydro powered grinding

b. Biomass based Electricity generation

Financing and Delivery models

Financing through RRBs (for individual end users or Entrepreneurs) Financing through Cooperatives

12

WWF-ICRISAT (2008), SRI Fact sheet- India, SRI India Network, Available at: http://www.sri-india.net/documents/india.pdf, accessed

on 20/06/2013

13 Akshara Network (2013). Paddy Value Chain Analysis, Akshara Network, Andhra Pradesh. Available at:

http://www.aksharakriti.org/magazines?start=12, accessed on 12/6/2013.

RE product,mainte

nance

RE Products, Maintenance

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Constraint # 1 – Energy for water pumping: The problems of water availability affect crop cultivation across the country. In the tilling phase and parts of the production phase, the water requirement for paddy is as high as 1200-1400mm per cropping season

14. Without adequate rains, farmers are compelled to spend on diesel powered pump sets

or use electric pumps when power is made available. In Karnataka, the latter are more common and require that farmers stay awake late into the night in anticipation of power supply. In Bihar, diesel powered pumps are extremely common but have become an expensive proposition due to the increase in diesel costs. If they are able to pump out water, farmers flood their fields after the tilling process before transplanting takes place.

RE Intervention: Solar powered water pumps can help overcome the dependence on other unreliable alternatives. However, the pump is most effective when the motor is efficient and the pump is combined with an efficient irrigation system- such as drip irrigation. While drip irrigation is not ideal for paddy crops particularly in the initial phase, solar energy can be used to simply pump water into an overhead tank from where it could be used to flood the fields as required for the paddy crop. In the Gangetic plains of Bihar where the water table is relatively high

15, the capacity of

the pump required to draw out water is smaller. Hence, solar powering it will also be less expensive. This may not be the case in an arid area like North Karnataka. Thus, a number of factors would play a role in the size of the pump and consequently affect the cost as well.

Box 1: Opportunity in Solar Water pumping

Opportunity: This is primarily targeted at farmers with around 7-10 acres of land. The 2-3hp pumps sets sell the most. Solar water pumps are useful for a variety of crops including but not limited to paddy. Ideally, the pumps should be combined with an efficient mode of irrigation such as drip irrigation.

Cost comparisons: In Bihar, the economic opportunity is very clear since the alternative (diesel) works out more expensive. For a 3hp diesel pump, on average, farmers use about 5 litres of diesel per day at Rs. 50 per litre. While the

14

Agropedia (2009), Irrigation Water Management in Paddy, Agropedia website, IIT Kanpur. Available at

http://agropedia.iitk.ac.in/content/irrigation-water-management-paddy, accessed on 12/6/2013.

15 Anywhere between 6-12 meters depending on the area.

Bihar Watershed Development Society (2011), State Perspective and Strategic Plan, Directorate of Soil Conservation, Bihar, Available at,

http://krishi.bih.nic.in/new2012/SPSP%20(DELHI)Final%2004-01-2012%20-%20.pdf, accessed on 12/06/2013.

Opportunity

•Targeted at farmers with 7-10acres of land

•Useful for variety of crops, not limited to paddy

•Ideally combined with efficient irrigation

•Current pumps require expenditure on diesel or are depend on electricity supply

Cost comparison

based on 3hp pump

•Solar water pump cost recovery within 5 years

• Diesel pumpsets= Capital cost : Rs. 70000; Running cost: Rs. 7000 per month

•Solar powered pumpset= Capital costs: Rs. 4 Lakhs; Running cost: negligible

Manufacturers and Project

implementers

• In recent times, rise in number of players

•Claro Ventures, Atom Solar, Schneider, Kirloskar etc.

Missing Gap: End

user financing

•Need to increase interest

among RRBs- ticket size is large

•NRLM can support demonstration of technology

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initial cost of the pump is around Rs. 70000, the running cost works out to more than Rs. 80000 on an annual basis. The cost of a solar water pumping solution including basic warranties works out to around Rs. 4 Lakhs for a 3hp pumpset. While the capital cost is high, the recovery period is about 5 years. In Karnataka, the advantage is mainly of greater convenience and size of the pump. In a survey conducted by SELCO Foundation16 in parts of Karnataka, more than 70% of farmers stated that the main problem they faced was the lack of reliable power supply. Electricity is generally available for two hours in a day. This of course means that the farmer cannot pump the requisite amount of water required with a 1hp pump. The farmer would then be forced to buy a larger pump to meet the irrigation requirements. With a solar powered pump, a lower capacity system can be used during the day to irrigate the entire land area.

Diesel prices in India have increased more than two fold over the last decade17. In the case of electricity, supply constraints become a hindrance to the use of conventional pumps. The reasons mentioned above clearly make the solar pumping solution more attractive in the long term despite relatively high initial costs. The steep initial investments can be addressed using an instalment based financing mechanism ensuring recovery in less than 5 years.

Project Implementers: In recent times, there has been an increasing interest within the off-grid energy sector to work on efficient pumps powered by solar energy for small scale farmers. Companies such as Claro, Atom solar, Kirloskar, Schneider etc. working in the solar water pumping sphere are able to offer pumps ranging from 0.25hp all the way to 10hp. Despite its advantages over the conventional pumping solutions, without better end-user financing mechanisms, the initial cost makes the system comparatively much more expensive.

Missing gap: End user financing still appears to be a barrier particularly for smaller farmers. There is a need to increase interest among rural banking institutions to lend towards solar water pumps through farmers’ cooperatives or through direct loans under the agricultural portfolio. Given the larger ticket size, solar water pumps, would be an attractive proposition for banks to give out loans. However, currently banks are sceptical of the technology. In Bihar, the BRLP is currently supporting a small pilot project for solar pump technology provider. It is essential that state livelihood projects work on pilots with the goal of convincing banks of the technology and incentivising them in the next phase to advance loans for this category within agriculture. This should include a component of bankers’ training and sensitization to acquaint them with the technology and its bankability. In the near term, state livelihood projects can also support organizations in exploring other models of delivery such as rental models, cooperative-owned models and so on.

Constraint # 2 – Other agricultural equipment: Farms in areas that are hilly and forested such as those in South Karnataka are faced with the challenge of dealing with wild animals treading over the crop or prepared land- both of which are damaging. These animals include elephants, wild pigs, etc. Many of these areas face severe power shortages and electric fences could have lethal consequences if not designed well.

RE Intervention – Powering the fence using solar energy with appropriate design can provide non-lethal shocks to animals and protect the land area of small scale agricultural farmers.

In the production process, the sprayer is another application where charged battery packs can be used to cover large tracks of land for pesticide spraying. Solar powered battery packs with 3-4 hours of backup, powering a sprayer with a throw of 10 ft are sufficient to meet the spraying needs of a small scale farmer.

Constraint # 3 – Post production energy usage: In the process of dehusking or hulling the paddy grain as well as grinding the grain into flour (wherever relevant), there are constraints on the energy front. While dehusking can be done using machinery, the small scale farmer is forced to approach mills where the process also strips the grain of its nutrients.

RE interventions: For a farmer in hilly areas of Karnataka, adopting pico-hydro system can not only power basic lighting and fans but can also be used for paddy hulling at the local level. With pico-hydro systems, the power generated is significantly higher than the load in most areas. Combining these systems with paddy hulling or grinding machines can ensure productive utilization at no added cost. There are examples across Nepal of water mills being used to power such machines, with work being undertaken through an organization called the Center for Rural Technology

18.

16

SELCO Foundation is an organization set up in 2010 to develop robust and field-proven technological and financial models in the field of renewable energy, and generate public awareness about these models. http://www.selcofoundation.org/selcolabs

17 Mehta, R. (2012). Chart of the day: How diesel prices have doubled in last decade, Available at:

http://www.moneycontrol.com/news/market-edge/chartthe-day-how-diesel-prices-have-doubledlast-decade_757880.html, accessed on 12/06/2013 18

The Centre for Rural Technology, Nepal (CRT/N)is a professional NGO engaged in developing and promoting appropriate technologies

effective in meeting the basic needs and improving life standard of the rural people. http://www.crtnepal.org/

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While dealing with agricultural waste in paddy farming, there is the opportunity to close the loop as demonstrated by Husk Power Systems’ technology. Operating in Bihar, Husk Power purchases paddy husk from farmers for use in biomass gasifiers to produce electricity to meet basic energy requirements in the village. This model facilitates electricity generation while also helping the farmer earn remuneration for the waste generated.

b. Dairy Farming

Through state level cooperatives, dairy provides supplementary income to more than 2 million households across Karnataka and over 0.7 million households in Bihar

19. On an average, each household owns between 1-2 cows or

buffaloes and their monthly income from dairy is approximately Rs. 4000 of which 50% is spent on related expenses.

The value chain consists of production at the household level by members of the milk cooperative, aggregation and collection through village level cooperative societies, storage and transportation through regional collection centers and finally processing and packaging through district level dairy unions before reaching the market. The parts of the value chain where RE would have greatest impact are at the village level cooperative and to a lesser extent at the household of the producer.

Constraint # 1 – Lighting needs: As depicted below, at the household level, there is a need for better lighting facilities. Farmers deposit milk at the village cooperative twice a day, around 7am and 5.30pm. Since farmers have to deposit milk between 7 and 7.30am in most areas, the milking process has to begin as early as 5.30am. In the absence of adequate lighting and power failure, they are dependent on kerosene and candles to carry out this activity. Not only is the light dull and insufficient in brightness, but kerosene lamps are also a fire hazard in the cattle-shed.

RE Intervention: In this case, individual households can benefit from provision of solar home lighting systems, especially in the cattle shed where milking takes place.

Figure 4 – Value Chain of Dairy Farming

Phases in the value chain

Household Level (Milking process)

Dairy Cooperative Society (Aggregation of milk from local farmers, testing and weighing, ready to be transported to collection centers)

Constraints / Risks

a. Power failures, kerosene usage in the morning during milking

a. Lack of power to use testing and weighing machines - causes delay in milk collection

b. Lack of cold storage facilities- could lead to milk spoilage if the collection van is delayed

RE Interventions

a. Solar powered lighting, financed through the cooperative itself

a. Solar powered testing and weighing machines b. Small-scale milk cooling units powered by solar energy or

pico-hydro

Constraint # 2 – Milk testing requirements: Under the Karnataka Milk Federation (2nd

largest dairy cooperative in India), there is a cooperative society in a radius of every 2 km for milk to be deposited. Here, milk is tested and weighed for fat, water content, volume and quality, based on which farmers are paid. On an average, they test around 800-1000 litres of milk a day, as and when it is brought to the center. Being located at the village level, these dairy cooperative societies are subject to 3-10 hours of power cut, often at critical times when milk is to be tested. Without power, workers at the cooperative society are forced to wait till electricity returns before testing all the milk, which can lead to a delay in handing the milk over to the collection centers. It can also result in milk getting spoiled before testing, affecting the remuneration for the producer.

RE Intervention: The constraints captured above warrant the need for independent, reliable off-grid supply to power the weighing and testing machines. Some organizations also advocate for chilling machines to be set up at cooperative societies to reduce spoilage and increase the shelf life of milk.

19

Milk cooperatives in Bihar (Comfed) and Karnataka (KMF): http://compfed.co.in/about_us1.htm; http://www.kmfnandini.coop/

12

Solar powering of these machines with lighting facilities allows workers in the cooperative society to work more effectively, both during the day as well as after sunset. Milk testing can take place immediately and in bright light (relevant during evening collection) and the producer’s remuneration decided on time. There are also examples of enterprises involved in the dissemination of small-scale solar powered chilling machines, ideal for village level cooperatives that can reduce spoilage of milk and ensure produce is intact to move to the next level of the value chain. Since these are cooperatives, increases in efficiency through these machines will ultimately have an impact on the remuneration of individual producers as well.

Box 2: Opportunity in Milk testing and weighing

Opportunity: Under the State milk federation across Karnataka alone, there are nearly 10000 dairy cooperative societies where milk collection, testing and weighing take place twice a day. In Bihar as well, the state run milk federation covers over 8000 dairy cooperative societies. The lack of lighting and reliable electricity in these centers increases the inconvenience and affects the efficiency of work.

Cost of intervention: At present, the only alternative for lighting is kerosene lanterns that add to the expenditure with the usage being more than 10 litres a month at Rs. 60 per litres. With regard to the weighing and testing machines, their power put together is so low that there is a dearth of generators in the market that can meet this requirement.

The solar powered alternative not only increases the convenience to a great extent, it is also economical. A solar powered system to run 2 lights, milk testing machine and weighing machine (along with appropriate warranties and maintenance) costs approximately Rs. 30000.

Project implementers: This model has already been implemented on the ground by a few off-grid energy players. For example, to overcome the problem in the women’s dairy cooperatives across the state, the Karnataka Milk Federation (KMF) applied for a government grant to solar power these machines. On receiving the grant, they have implemented a pilot in 2 cooperative societies through SELCO India20 and are looking to expand the effort to 25 other women-run units. A similar intervention was undertaken by Boond21 in Uttar Pradesh for 25 units of a private dairy.

Need for end user financing: It would be appropriate for the livelihood mission to support the loan applications of

20

SELCO India is a social enterprise providing sustainable energy solutions and aims to empower its customers by providing a complete package of product, service and appropriate consumer financing through Grameen (rural) banks, cooperative societies, commercial

banks and micro-finance institutions. http://www.selco-india.com/

21 Boond creates entrepreneurs who sell and service development products like solar lamps (and home systems), water filters, efficient

cooking stoves etc. in remote and rural areas. http://www.boond.net/index.php

Opportunity

•10000+ cooperative socieities in Karnataka; 8000+ in Bihar

•Inconvenience; inability to test and weigh milk at appropriate times to determine remuneration

Present costs vs.

costs of RE intervention

•Kerosene for lighting during power outages (>Rs. 600 per month)

•Lighting, and machines on solar power= Rs. 30000 (one time cost)

Project implementers

• Piloted by Boond in UP and SELCO-India in Karnataka

End user financing

•NRLM support for loan applications of Cooperative societies

•Utilization of other credit access schemes for Cooperative societies

13

cooperatives societies at each district level to purchase such systems from local financial institutions. To incentivize first movers and promote initial uptake, the mission can support loans at reduced interest rates from RRBs and cooperative banks. RRBs can also be consulted to capitalize on favourable financing schemes that already exist for cooperative societies and facilitate the link with such a renewable energy intervention.

Financing and Delivery models Financing through RRBs for individual end users or entrepreneurs: Here, certain financial products (depending on the local ecosystem) can be made accessible either to end users directly or towards local enterprise creation. For example, purchasing agricultural machinery such as sprayers or solar fencing can be met through individual loans under agriculture financing. On the other hand, a pico-hydro system (for paddy hulling and grinding) where the capital cost is higher can be financed at an enterprise level. A micro enterprise sector loan for agri-processing would be applicable here. Depending on the local economy, the strength of the financial institutions and the extent of entrepreneurial abilities in the state, an appropriate financial product can be provided. Financing through cooperatives: Existing cooperative societies can be effectively used to channelize financing for a number of agriculture and dairy related interventions. This would require that the SRLM look beyond the SHG model and recognize other forms of grassroot level institutions and make them eligible to access government benefits. ‘Interest free’ loans or small grants could be extended to farmers’ cooperatives through RRBs or other micro-credit lending agencies. Dairy cooperative societies operating in Karnataka are only able to provide their members with loans of small values. Solar loans can be provided to individual producers to access lighting for the cattle-shed and the interest accruing from these loans can be used to build the revolving fund of the cooperative society. Alternatively, the cooperative society can help individual farmers access loans from rural cooperative banks or RRBs by supporting their loan applications. A solar lighting system for the cattle shed can also be packaged with loans of other value-add products and services for the dairy farmer, such as cattle purchase and insurance. Similar schemes can also be replicated for dairy cooperatives to assist in their purchase of solar systems to power testing and weighing machines.

2) Micro, Small and Medium Sized Enterprises (Unorganized Sector)

NRLM has focussed to a large extent on working with the needs of traditionally recognized rural livelihoods in the primary sector (eg- agriculture, dairy, poultry). However, an important input from the field is the need to also focus on the improvement of livelihoods in the secondary sector- particularly at the local level. This secondary sector of micro, small and medium enterprises is a significant employer of rural people and plays a vital role in supporting other aspects of the rural economy. Within this, the unorganized sector employs more than 100 million people across the country and is defined as any enterprise employing less than 10 workers22. This sector also faces large energy gaps and energy inefficiencies23. Apart from energy interventions, the workers in this sector must be supported by NRLM for mobilization, organization and internal capacity building. Here, we have focused on two such MSME sector livelihoods, relevant to the conditions in both Bihar and Karnataka.

Small restaurants and local eateries

Mechanics and local repair shops

Technology Interventions

a. Small Restaurants and Local Eateries

22

Prime Minister’s Task Force, Government of India (2010), Report on Micro, Small and Medium enterprises, Government of India.

Available at: http://msme.gov.in/pm_msme_task_force_jan2010.pdf, accessed on 20/06/2013.

23 Singh, U. (2012), Energy efficiency in MSMEs: Challenge lies in replication of technologies, Energy Next. Available at

http://www.energynext.in/energy-efficiency-msmes-challenge-lies-replication-technologies/, accessed on 20/06/2013.

14

These are primarily small food joints found in every village and block headquarters. On the higher end, their monthly income is anywhere between Rs.70000 to Rs. 90000

24. Given the nature of activities involved and production process,

this sector faces huge energy requirements. On an average, their current expenditure on energy sources such as LPG, firewood, diesel, kerosene and coal amounts to nearly 25% of their total income.

Figure 5 – Value Chain of Small Restaurants and Local Eateries

Phases in the value chain

Preparation of food Serving of food Storage and food waste Constraints / Risks

a. Significant expenditure on LPG and Firewood

b. Power outages and diesel consumption on motors to pump water from the borewell; Highly inefficient pumps

a. Consumption of LPG for heating an un-insulated metal hotcase, where lunch is kept warm

b. Power outages affecting usage of lights and fans

a. Lack of cooling facilities for soft drinks -in dry and arid regions

b. Wastage of food- nearly 20-25% in many cases

RE Interventions

a. Explore institutional Biomass stoves

b. Replace old pumps with more efficient ones

a. Using biogas instead of LPG to keep the metal hotcase warm

b. Solar powered DC lighting and fans

a. Small refrigerator or 50 liter cold storage unit run on solar

b. Food waste can be fed into a prefabricated biogas plant; Gas produced used for heating requirements

Financing, Training and Delivery models

Conditional soft financing support for Enterprise financing Entrepreneur based, centralized charging model Support in accessing affordable financing from various sources Inclusion of skill improvement modules

Constraint # 1- Cooking requirements: One of the main constraints in the sector is the high cost of cooking fuels and the impact it has on net income of the enterprise. With a cap on the number of LPG cylinders available to each commercial unit, firewood is also used in many cases as a replacement for LPG in cooking. Similarly while serving food, un-insulated metal hot cases are immersed in water and heated using LPG to keep food items (like rice, sambar, rasam) warm during lunch hours. LPG consumption in the process is high and much of the heat escapes due to lack of proper insulation. Energy intervention: Organizations like TIDE with considerable experience in the institutional stove model are providing solutions for more efficient usage of firewood for cooking, with less smoke25. Such stoves differ in design based on the item being cooked and allow for other forms of biomass- agri-waste, coconut shells to also be used. In the case of fuel consumption for keeping the food warm, the metal case can be re-designed for better insulation and LPG substituted with biogas where the pressure is not high but would be enough to meet basic heating requirements.

24

Based on field surveys undertaken by SELCO Foundation in 2012.

25 TIDE is an organization devoted to promoting sustainable development through technological interventions, by linking academic

research with the needs of the community. http://tide-india.org/about/

15

Many of these eateries report food wastage as high as 25%. Connecting this with a pre-fabricated biogas plant, similar to the ones designed by ARTI in Pune and using the gas for basic heating would help close the loop in some sense

26.

These prefabricated syntax tanks provide the advantage of being compact biogas systems, which can function with minimal quantities of food waste, even as little as 1.5kgs. Thus, they are ideal in cases where the feedstock is not substantial enough to warrant a large Deenabandhu or Floating drum model. Constraint #2- Non-cooking energy needs: With regard to non-cooking energy requirements, basic lighting and fans are essential in many parts of the country particularly in summers. With power outages, neither these nor basic cooling facilities can operate. Most of these restaurants also continue to use inefficient pumps that add to the electricity utilization. RE intervention: Solar powered lights, fans and small cooling units available in the market can help in addressing the basic issue of power outages. Small cold storage units available in the market (eg: Phocos) can be powered using solar energy or pico-hydro power, where available. This adds value to the income of the eatery since chilled soft drinks can attract a premium over the regular price. These interventions combined with energy efficiency tactics such as replacement of old motors with more efficient ones can also play an important role in this livelihood sector.

b. Mechanics and Mobile-Phone Repair Shops

Again, this is a subsector that is vital to the rural economy. In Karnataka, each of these shops, depending on the scale has a monthly income of Rs. 15000 to Rs. 20000. A disadvantage often faced by these businesses is their inability to access permanent spaces. They are housed in makeshift sheds or temporary structures- making reliability of energy even more challenging.

Figure 6 – Value Chain of Mechanics and Mobile Phone Repair Shops

Phases in the value chain Repairs Scheduled Servicing

Constraints / Risks

a. Lack of access to legal electricity connections and adequate lighting facilities

b. Inability to recharge traditional tubular batteries used in vehicles during repairs

c. Lack of electricity access to undertake repair jobs that involve soldering

a. Lack of bright lighting that could extend working hours

b. Need for distilled water to maintain tubular vehicle batteries

RE Interventions a. Solar powered portable battery pack to power LED light; charged at home and used for 3-4 hours at the shop

b. Solar powered recharging is possible- technology will resemble what is used in current Home lighting systems

c. Soldering gun powered on solar

a. Solar powered portable battery pack to power LED light; charged at home and used for 3-4 hours at the shop

b. Explore solar still (Water distillation through solar)

Constraint #1- Lighting needs: Since these units are housed in temporary structures, their only access to electricity is through illegal connections. Without adequate lighting facilities after dark, shops are forced to turn away potential customers or manage the work in dim lighting using candles and kerosene lamps. This scenario has a direct impact on their income generating capacity. RE intervention: The solution provided not only has to be independent of the grid, it also has to be portable for the workers to carry home and bring back. Solar powered battery packs to power LED lights can be used in this situation. Charging through the solar panel can take place at the house of the mechanic, and can be brought to the shop before sunset. The brighter light not only alleviates the working conditions after dark, it also serves as a way to attract customers to the shop and make them aware that repairs are still being undertaken.

26

ARTI (Appropriate Rural Technology Institute) works to develop and transfer innovative, sustainable technologies to rural people for

income generation and to improve their quality of life. http://www.arti-india.org/

16

Constraint #2- Battery charging and soldering requirements: Mechanics often have to recharge vehicular batteries as part of the servicing process. Unable to charge batteries within the store, they are forced to outsource the task. Similarly, mobile phone repair and motor bike repair shops outsource their soldering tasks to the nearest electrified store and incur an expenditure on this service. RE intervention: It would be extremely useful and economical for mechanic shops to be able to charge batteries off solar energy. The solar home lighting systems use batteries very similar to the ones used in vehicles. A similar system can be wired up at the house of the mechanic to allow him to recharge batteries. This overcomes the hassle of having to outsource the task. Within the possibilities for using RE, water can also be distilled through solar energy, packaged and used in battery maintenance. At a later date, this could even be promoted as a business opportunity for a micro-level entrepreneur.

Box 3: Opportunity in Battery charging and soldering

Opportunity: There is a dearth of reliable information on the exact number of mechanics and mobile repair shops in each block or district. Within each of these businesses, there are certain essential repairs such as soldering and battery recharging that must be undertaken.

Costs of RE intervention: At present, for such energy-dependent repairs, they are forced to outsource the task which is not only inconvenient but also eats into their total income. Through appropriate interventions, these services can be offered by mechanics from their existing locations. A soldering gun for basic mobile repairs costs about Rs. 500 while solar powering it would cost about Rs.1500 to Rs. 1700 (one time investment).

Solar power is also applicable in charging vehicle batteries. A typical motorbike with 12Ah – 15Ah battery or autorickshaw with a 30Ah battery can be recharged using the same technology as applicable in a solar home lighting system. With solar charging systems consisting of panels ranging from 20W-40W, at a cost of Rs. 2000 to Rs.5000, these shops will be capable of recharging the batteries of their customers without incurring any additional cost of outsourcing the activity.

Project implementers and Financing: This need can be met by any existing off-grid solar energy provider in the area. A basic instalment based repayment mechanism should suffice in the case of these relatively low cost interventions. Financing can be extended from within the existing workers’ union or SHG, which will also be responsible for collections. If there is an interest in combining these RE services with other interventions, other financing mechanisms such as those detailed below can be explored.

Financing, delivery models and Training Conditional soft funding support for Enterprise financing: To encourage utilization of energy efficient equipment and off-grid RE interventions, access to finance must be improved. Making the access to soft funding for new enterprises

Opportunity

•No reliable information on exact numbers

•Increased convenience and reduced expenditure on outsourcing

Costs of RE intervention

•Soldering, including equipment- Rs. 1500- Rs. 2000

•Charging vehicular batteries- Rs. 2000- Rs. 4000

Project implementers and Financing

•Any off-grid solar energy provider

•Need for instalment based repayment mechanisms

17

conditional on the uptake of RE interventions can address the issue. These conditions should be made applicable for grant amounts, available under ‘livelihood promotion’ funds of SRLMs that potential entrepreneurs in the unorganized MSME sector can access. This will achieve the two fold benefit of energy access while supporting this livelihood category with some soft funding. Entrepreneur based, centralized charging model: The portable lighting solution as well as the battery recharging facilities relevant to mechanic and repair shops can be delivered through a centralized charging model as well. In some cases, mechanics may not live close enough to the shop to be able to go home before sunset and bring back the charged battery pack for lighting. This may also be an impediment if there is an urgent requirement for battery recharging. In such cases, NRLM can facilitate the creation of an entrepreneur who is able to access credit from an RRB. This entrepreneur can charge portable lights as well recharge batteries which are then delivered to the doorstep of the user. Supporting individuals access affordable financing: Whether in the case of small restaurants or mechanic shops, there are equipments that cannot be purchased through one-time instalments and will need to be supported through loans. Apart from organizing the credit linkage, the SRLM can integrate the subsidies and financial benefits accruing to the MSME sector through other sources. These benefits can then be channelled it in the form of interest-subsidies or back ended subsidies, reducing the loan instalment for the borrower. Inclusion of skill improvement modules: In addition to basic skill development that is currently undertaken for unemployed youth through some SRLMs, there is a need for skill improvement course modules in this category. Here, individuals can be kept abreast of the latest developments in their sector. The delivery can be through existing ITIs or RUDSETIs for more technical courses and through partners identified for sectors such as retail, hospitality, tailoring (who are currently only engaged in basic skill development)

3) Energy Centers and Entrepreneurs

More than 400 million across the country lack access to reliable energy to meet their basic requirements. In rural Bihar, households spend more than Rs. 230 per month on lighting and mobile charging alone

27. In parts of Karnataka, this

number is as high as Rs. 320 per month. With access to reliable energy becoming an important requirement to improve studying habits, health, cooking conditions and general living standards in rural households, the value of using off-grid energy solutions increases greatly. It is important to recognize that energy access can not only facilitate productivity improvements in existing livelihoods, but is also a means of creating new livelihoods. Energy access would be an important need across all states, and hence can be an intervention undertaken at the national level. Establishing business opportunities for individuals and SHGs to capitalize on the need for sustainable energy solutions can be made part of the Environmental Management Framework under the NRLM. As an operational model, this would help in not only meeting the social development goal, but also increasing livelihood opportunities at the block level and below. Existing energy technology and strategy enterprises will act as vital partners in the creation of energy centers. They will be involved significantly in the knowledge transfer process and can partake in creating strategic plans for energy interventions. These enterprises include organizations mentioned above such as TIDE, ARTI, Claro, Boondh, SELCO-India, micro and mini-grid players, etc. that are running operations in specific geographical areas and have an expertise in certain types of decentralized energy solutions. Support can be extended through NRLM for these organizations to replicate their model through local entrepreneurs or set up rural networks in the state to address energy-livelihood linkages.

a. Products and Services

Energy Centers, which could be run by individuals, SHGs or cooperative societies would be capable of meeting the basic needs of households and in addition, customizing services based on other energy needs in the area.

27

Based on field information collected by SELCO Foundation in 2012.

18

Figure 7 – Products and services accessible through Energy Centers

As depicted above, the first set of household related energy services could range from solar powered home lighting systems to independent mobile charging kiosks and water heating products to the installation of home-based efficient chulas. For example, TIDE has successfully trained women who formerly worked for daily wages as manual labourers or spent time rolling ‘beedis’ in their homes, to construct smokeless ‘chulas’. The chulas, made out of locally available material, help women earn more than 5 times their previous income by constructing 1-2 stoves a day. In the case of mobile charging, it can be made a decentralized service if a group or individual is willing to invest in a charging kiosk. They can charge mobile phones at the village itself for Rs. 5 per charge. This would save individuals the time and money spent in travelling to the nearest electrified town. The uniqueness here would be to bring all of these energy services under one roof. An existing micro-grid entrepreneur in a village could also be trained to handle this larger energy portfolio. The customized services would be dependent on the location of the energy center. A temple town, a block headquarters or a village center could be a location where the demand for information services would be high- be it on travel, specific livelihoods or socially relevant issues. Here, laptop charging points powered by solar energy with access to relevant material on each issue would be extremely useful to end users. Audio-visual aids through this could also be used by the state rural livelihood promotion society (SRLMs) to facilitate capacity building for their SHGs. In addition, this entrepreneur or collective could be equipped with skills and technology relevant to meet the energy needs of a government school or primary health center.

b. Financing, Delivery models and Training

Financing: These micro-energy centers can be run as cooperatives or by SHGs or through individual entrepreneurs. For increased responsibility and accountability, cooperatives or individual entrepreneur models are ideal. To avail of seed financing, credit linkages with RRBs can be capitalized upon. In addition, NABARD28’s Natural Resource Management portfolio (that includes solar energy interventions in rural areas) can be a good resource for NGOs to support the establishment of such energy centers. Subsidies and other incentives accruing from renewable energy programmes such as the National Solar Mission could be credited through the bank loan channel. Affordable financing would be critical to facilitate the creation of Energy Centers that are owned and run by locals- with particular focus on inclusion of grassroot level entrepreneurs. Accessing such financing is a critical barrier to the vernacular speaking population in this country. Using available resources to provide an opportunity for them to realize their entrepreneurial skills would play an important role in making the center a purely decentralized, local space to access energy products and services. Delivery models: The above sets of services could be disseminated through various different models. Some of these services- for example solar home lighting or efficient cookstoves- will either be provided through direct cash sales or through micro-loans from RRBs or internal funds of SHGs. For other services, such as mobile charging, laptop and audio-visual aids, the model may be a pay for use or rental model. In the case of the last set of maintenance-related services, these collectives can function as local service representatives of technology providers and ensure that all RE interventions in other livelihoods in a certain jurisdiction are functioning well. The need for this category of services

28

National Bank for Agriculture and Rural Development (2013). Information on website- Eligible sectors and Activities, NABARD.

Available at: http://www.nabard.org/farm_sector/eligible_sectors.asp

Ho

use

ho

ld e

ner

gy

serv

ices

•Lighting

•Mobile charging

•Water heating

•Water purification

• Efficient cookstoves

• Micro-grid operations C

ust

om

ized

ser

vice

s

• NRLM related: Laptop charging, Projectors and Internet access for SHG capacity building programmes, credit linkage

• Information services: Increased access to information relevant to farmers' groups, dairy cooperatives, individual entrepreneurs etc.

• Other social requirements: Solar cookers for requirements of Educational institutions; vaccine storage units, other equipment for health centers

Mai

nten

ance

p

rovi

sio

ns

• Maintenance of RE in other livelihood categories

• Local servicing representative for RE equipment in the area

19

may appear intuitive, but the focus must be on operationalizing this to avoid any future failures due to inadequate maintenance provisions. These services could be provided through a fee for service model or through annual maintenance contracts, as is applicable with other products and services. In some cases, it would make perfect sense for the local NGO or existing micro-grid entrepreneur operating in the area to expand its portfolio and undertake the responsibilities of an energy center as well. Training: The basic capacity building and financial training for such micro-energy enterprises can be disseminated through existing mechanisms under the relevant SRLM. Specific skill building and technical training, on the other hand, needs to be imparted through local ITIs and RSETIs. Existing renewable energy enterprises can support in the creation of relevant course material to train ITI students. These enterprises would also need to provide training relevant to the equipment being disseminated in the area for other livelihoods so that future maintenance can take place in an effective manner. Below is an illustration of how the new breed of Energy enterprises would fit into the existing programme of Rural Livelihood promotion and the missing gaps in the ideal ecosystem (outlined in blue). Figure 8 – Ecosystem for Energy Centers to exist within NRLM

IV. Recommendations for improving the ecosystem under NRLM

The sections above elaborate on the kinds of sustainable energy interventions that can be implemented within the purview of the livelihood mission. Apart from these interventions, there are other issues albeit non energy related that must be addressed for better implementation of the mission in general and the inclusion of RE interventions in particular. These recommendations cover various aspects of the ecosystem that could affect the provision of better energy access for livelihoods within the existing structure of NRLM. A brief on the concerns and ways to address them are provided in the table below.

Ecosystem for creation of Energy

centers

Products and Services

Seed-Financing

(through Micro Credit

linkages)

Technical training and Knowledge transfer (through ITIs and RSETIs

supported by RE enterprises)

Capacity building and

Financial training

(through SRLM)

20

Table 2 – Ecosystem related recommendations for NRLM

Concern Recommendations

INCLUSION OF ENERGY: Inclusion in mandate and Earmarked allocation for energy interventions

Energy interventions must be included as one of the key features under NRLM29 in addition to Social mobilization, Training and Capacity building, Financial inclusion etc. Given its significance for livelihood promotion, it must become part of the mandate of every SRLM. SRLMs should have earmarked allocation towards energy under both grant and financing options.

FINANCING:

Coordinate financing accruing from different channels for similar end goals

Need to coordinate financing from different ministries accruing to same livelihood categories. Some work on understanding the type of incentives available for different livelihoods and creating a database of the same will be a first step in the process. The existing model of credit linkage facilitated by SRLMs can be leveraged to allow for disbursal of various financial incentives for each livelihood through banking channels. There must also be an effort to capitalize on refinance options that NABARD provides to RRBs on an earmarked basis for promotion of various livelihoods. NABARD offers direct financing to organizations implementing projects in the field of Natural Resource Management- solar projects for a set of livelihoods could potentially be covered under this scheme. The Differential Rate of Interest (DRI) scheme created to provide loans at lower rates of interest for productive utilization can also be used for lending towards RE interventions30. Beneficiaries of NRLM are being categorized as ‘weaker groups’ within priority sector lending, where 10% of all advances under the priority sector must be extended to weaker sections31. This target for bank branches can also be met through advances for the uptake of RE products and services.

LIVELIHOOD PROMOTION: Greater financial support for more focussed livelihood promotion

While community mobilization and capacity building are essential for such a programme to run smoothly, states that have strong community organizations must capitalize on those rather than reinvent the wheel by following models being used elsewhere. It is essential to re-focus efforts towards livelihood promotion and treat capacity building as a stepping stone towards improving efforts in the former area. Greater financial support must be allocated towards livelihood improvement. This can be in the form of grants, interest subsidies, allocations to cover transaction costs and so on.

SUPPORT FOR ENTREPRENEURS

Need for more targeted projects to improve the ecosystem for Grassroots level entrepreneurs

NRLM provides an excellent opportunity to support grassroots level entrepreneurship in all areas including energy access. Under most circumstances, their ability to access soft funding and low cost capital for enterprise development is limited by their lack of educational qualifications (degrees) or their inability to effectively communicate in English. The NRLM with its rural focus is an ideal mechanism to improve the ecosystem for such entrepreneurs by supporting them in their access to finance, their need for skilled manpower and other resources for enterprise functioning. The Mission can capitalize on its livelihood promotion targets to meet the larger goals of local entrepreneurship development. This can be the first step towards increasing the equality of opportunities among various breeds of entrepreneurs.

29

Ministry of Rural Development (2010-11). National Rural Livelihoods Mission- Framework for Implementation, Government of India.

Available at http://www.aajeevika.gov.in/nrlm/NRLM-Framework-for-implementation.pdf, accessed on 12/6/2013

30 Reserve Bank of India (2012), Master Circular Priority Sector Lending - Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes

(STs), Available at http://www.rbi.org.in/commonman/English/Scripts/Notification.aspx?Id=1083, accessed on 20/06/2013.

31 Reserve Bank of India (2012), Priority Sector Lending - Targets and Classification, Available at:

http://www.rbi.org.in/scripts/FAQView.aspx?Id=87, accessed on 20/06/2013

21

TRAINING: Greater utilization of ITIs and RSETIs

Similar to the manner in which SRLMs are leveraging banking networks to facilitate credit linkage, there should be a greater utilization of the ITIs and RSETIs for livelihood training and skill building. Specifically for RE, technology partners for various livelihood interventions (solar water pump, installation and maintenance of energy efficient equipment, institutional stoves, other producer promoter initiatives) can support in creation of relevant course material. And training for the same can be undertaken through existing training infrastructure.

OTHER LIVELIHOODS (MSME SECTOR):

Inclusion of MSME sector under State level implementation

As proposed in section on Interventions for MSME, there is a need to take cognizance of the employment in this sector and support their mobilization and capacity building. They will greatly benefit from access to credit linkages, particularly for enterprise financing. With regard to skill training, programmes being undertaken must be modified to also allow existing small enterprises to gain value from training.

V. Conclusion

The introduction of renewable energy interventions into the framework of the National Rural Livelihood Mission would be an extremely useful initiative from the viewpoint of project promoters as well as beneficiaries. The technologies would meet the basic energy requirements in different livelihoods and existing credit linkages can be capitalized on for implementation. The development-oriented agenda of the NRLM can be met using RE interventions that range from products and services to financing, delivery and a new category of livelihoods. This can be an ideal win-win opportunity where clean, reliable energy access can facilitate livelihood enhancement at the grassroots level. For this to be realized, effort will be required from the various stakeholders. There has been an attempt to suggest the kind of changes required in the current framework to be able to effectively disseminate RE technologies for rural livelihoods. Beyond the consent and agreement of the concerned government departments, implementing organizations from the RE sector should step forward and share their technology, resources and knowledge. A whole new breed of local energy representatives will be created to deal with the demand and maintenance of other energy interventions. In addition, training should be institutionalized through local training institutes with inputs from RE enterprises. Finally, financing available from NABARD through RRBs, incentives available for livelihood promotion from different schemes and existing credit linkages must be leveraged upon to provide affordable RE financing options to end users and potential entrepreneurs. Existing SHGs and cooperative societies must be used wherever possible to better allocate available resources and focus on the longer term goal of improvements in a wide range of rural livelihoods. With specific reference to RE interventions in different livelihood categories, a set of implementable, ready-for-market solutions have been suggested. These can be taken on by SRLMs in partnership with energy enterprises. Greater support for projects to be implemented by existing enterprises will add value by improving productivity and remuneration for individuals. More importantly, such pilot projects will create a precedent for policy change where energy is recognized as an important piece in holistic consideration of livelihoods.