I co-authored an article that was published in Outreach: a multi-stakeholder magazine on climate change and sustainable development.
The link to the article can be found here. The full text of the article is below:
The link to the article can be found here. The full text of the article is below:
The International Energy Agency estimates that 1.4 billion people will continue to lack electricity access in 2030. Renewable energy offers a sustainable alternative to bridge this huge gap. Increasing awareness around climate change caused by fossil fuels mandates continued development of renewable energy, despite recent discoveries of new fossil fuel sources. With decreasing system costs, ability to provide energy access in remote, off-grid locations and the imminence of grid parity in the future, both public and private entities stand to benefit by jointly promoting renewable energy systems around the world for the development of communities.
Though Public Private Partnerships (PPP) have become the preferred way for governments and international development agencies to ramp up infrastructure development globally, the experience with them has been mixed. The criticism of PPPs has focused on lack of independent regulatory mechanisms, incoherent ownership patterns, complexity and risks involved in financing. However, this has not stopped governments from promoting PPPs in renewables.
Emerging and under-developed economies – Brazil, India and Senegal have adopted replicable solar photovoltaic (PV) or hybrid models, albeit for different purposes. Brazil constructed a 400 kW solar PV generator to power a soccer stadium through a PPP between Electrobras, German Ministry of Environment (GIZ) and the State of Bahia. Rooftops of government buildings in Gandhinagar, India are being offered to solar energy companies to provide 5MW at pre-designated tariffs. Another hybrid PPP system (solar-diesel-wind) between PERACOD and INENSUS helped provide electrification and employment to a small village in rural Senegal, enabling villagers to generate income through economic activities and pay for power usage, thereby creating a mutually-beneficial, replicable model. These projects showcase a symbiotic relationship in providing power at the demand location by combining public sector facilities and private sector capital and expertise. They have also provided valuable policy lessons for future projects and key insights into pricing incentives. The State of Gujarat (Gandhinagar project) prices the power produced from these rooftop panels at a level that barely covers the opportunity cost of renting rooftops for other purposes. This sends a clear message that projects cannot be replicated till optimal incentives for all stakeholders are met.
A major challenge to scalability is cost - electricity generated from renewable energy sources is still many years from grid parity. Many PPPs fail because of fundamentally mismatched objectives of different stakeholders. For renewables particularly, the economics are far from ideal for private players. In this context, incentives and objectives of stakeholders need to be recalibrated. Governments must target increasing energy penetration and access, creating enabling policies, encouraging research and development (R&D) and focus on accrued social benefits, while private sector players should overlook wafer-thin profits in the short-term and focus on long-term investments and gaining a technological grasp in the sector. Further, research has shown that creating an ecosystem where a vibrant civil society contributes significantly to this partnership will provide the much-needed perspective on end user needs and aspirations. Appropriate involvement and intervention at each stage by the three sections will result in a workable, replicable model.
Though Public Private Partnerships (PPP) have become the preferred way for governments and international development agencies to ramp up infrastructure development globally, the experience with them has been mixed. The criticism of PPPs has focused on lack of independent regulatory mechanisms, incoherent ownership patterns, complexity and risks involved in financing. However, this has not stopped governments from promoting PPPs in renewables.Emerging and under-developed economies – Brazil, India and Senegal have adopted replicable solar photovoltaic (PV) or hybrid models, albeit for different purposes. Brazil constructed a 400 kW solar PV generator to power a soccer stadium through a PPP between Electrobras, German Ministry of Environment (GIZ) and the State of Bahia. Rooftops of government buildings in Gandhinagar, India are being offered to solar energy companies to provide 5MW at pre-designated tariffs. Another hybrid PPP system (solar-diesel-wind) between PERACOD and INENSUS helped provide electrification and employment to a small village in rural Senegal, enabling villagers to generate income through economic activities and pay for power usage, thereby creating a mutually-beneficial, replicable model. These projects showcase a symbiotic relationship in providing power at the demand location by combining public sector facilities and private sector capital and expertise. They have also provided valuable policy lessons for future projects and key insights into pricing incentives. The State of Gujarat (Gandhinagar project) prices the power produced from these rooftop panels at a level that barely covers the opportunity cost of renting rooftops for other purposes. This sends a clear message that projects cannot be replicated till optimal incentives for all stakeholders are met.
A major challenge to scalability is cost - electricity generated from renewable energy sources is still many years from grid parity. Many PPPs fail because of fundamentally mismatched objectives of different stakeholders. For renewables particularly, the economics are far from ideal for private players. In this context, incentives and objectives of stakeholders need to be recalibrated. Governments must target increasing energy penetration and access, creating enabling policies, encouraging research and development (R&D) and focus on accrued social benefits, while private sector players should overlook wafer-thin profits in the short-term and focus on long-term investments and gaining a technological grasp in the sector. Further, research has shown that creating an ecosystem where a vibrant civil society contributes significantly to this partnership will provide the much-needed perspective on end user needs and aspirations. Appropriate involvement and intervention at each stage by the three sections will result in a workable, replicable model.
While public and private sector roles are well articulated, civil society (non-profits, social entrepreneurs, and communities) interventions at each stage can be invaluable in the development of a successful, scalable model. Four possible project stages at which civil society interventions could take place are:
- Planning: Contribution towards articulation of purpose and end objectives, and providing inputs on possible social, economic and environmental effects
- Development: Deployment monitoring and reporting – mapping implementation with plans and providing feedback on quality of deployment
- Operation and monitoring: Social audits to ensure objectives are met and enable smooth functioning
- Handover: Identify community champions responsible for system continuance in case of exit of private operators after the project ends
In conclusion, an altered PPP model with recalibrated objectives and active civil society participation can ramp up adoption of renewable energy, particularly in emerging and under-developed countries where electricity access is low and most-needed.
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