How can Global Good Practices Mainstream DRE Solutions for SDG7?

REPORT

Decentralised Renewable Energy for SDG7

A Compendium of Global Good Practices

20 July, 2023 | Sustainable Livelihoods

Wase Khalid, Abhishek Jain, Selna Saji, and Sharath Rao

Suggested Citation: Khalid, Wase, Abhishek Jain, Selna Saji and Sharath Rao. 2023. Decentralised Renewable Energy for SDG7:A Compendium of Global Good Practices. New Delhi: Council on Energy, Environment and Water.

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Overview

This compendium meticulously identifies and collates the emerging good practices to mainstream Decentralised Renewable Energy (DRE) solutions. Envisioned as a ‘practitioners’ guide’ for the public- and private sector leaders, it synthesises ‘replicable and actionable lessons’ to fast-track DRE deployment for achieving the SDGs.

Key highlights

DRE must be at the centre of just and inclusive global energy transitions since it has emerged as a resilient and cost-effective approach to augment and achieve energy access in many developing countries — as showcased by a wide variety of examples in this compendium.
DRE should no longer be looked upon as a last-mile energy access solution but should be leveraged as a reliable and sustainable approach to meet energy needs for overall socio-economic development, furthering industries, agriculture, healthcare, education and job creation.
Public financing must address ecosystem-level needs of the DRE sector, such as skills and capacity building, awareness raising, supporting technology innovation and more.
The emerging lessons highlight the need for more active knowledge sharing across countries. G20 should strengthen its support for mainstreaming DRE solutions across the globe by furthering avenues for active knowledge sharing among private and public sector stakeholders across countries.

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Wase Khalid

Programme Associate

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"DRE is an efficient and cost-effective solution for achieving a just, inclusive and universal energy access. The compendium report's findings will equip practitioners (both in public and private sector) with emerging good practices to mainstream DRE solutions. In addition to enabling DRE deployment for SDG 7, these replicable and actionable lessons can help accelerate the impacts on health, education, and livelihoods, among others.”

Executive summary

A just and inclusive global energy transition is incomplete without universal energy access. At the current pace of progress, the IEA estimates that 660 million people in the Global South will still lack electricity access by 2030 – the year targeted to achieve the Sustainable Development Goals (SDGs) (IEA 2022b). Even as the centralised grids expand, decentralised renewable energy (DRE) is playing a significant role in bridging the energy access gap, both as an alternative and as complimentary to centralised grid systems. In 2021 alone, 179 million people gained access to electricity from DRE solutions - up from 35 million in 2012 (IRENA 2022a). DRE offers faster and more cost-effective solutions to increasing electricity access in rural or remote areas with lower population densities. Additionally, meeting the energy demand of emerging economies via renewable sources allows for a ‘double leapfrog’ towards energy access and clean energy (Jain et al. 2021). Thus, it is essential to recognise and mainstream DRE in order to realise a citizen-centric global energy transition.

A. A compendium on ‘good practices to mainstream DRE for SDG7’

The compendium meticulously identifies and collates the emerging good practices to mainstream DRE solutions. Envisioned as a ‘practitioners’ guide’ for the public and private sector leaders, it synthesises ‘replicable and actionable lessons’ to fast-track DRE deployment for achieving the SDGs.

B. Research approach

The compendium employs a literature review, multi-stage case selection, and ‘inductive reasoning’ to identify and analyse DRE good practices. More than 120 DRE case studies were identified across the globe through a snowballing technique. Multi-stage shortlisting criteria led to the final selection of 27 DRE case studies spanning 5 continents, 22 countries, and 10+ DRE intervention categories.

C. Emerging DRE good Practices

The good practices span five core areas that are most critical for igniting and growing the DRE sector in any region of the globe. These include an enabling policy environment, active community engagement, accessible and affordable financing, a thriving market ecosystem, and a conducive environment for innovations.

Good practices to create an enabling policy environment:

An enabling policy environment often forms the basis for the adoption and scaling-up of DRE interventions, given the high upfront costs and perceived risks. The policy environment should aim to achieve one or more of the following three objectives: providing long-term policy certainty, the flexibility to encourage innovation and adapt as the market grows and new challenges arise, and ensuring effective implementation. Several good practices to create an enabling policy environment have been identified from the case studies, which help implementing countries in achieving these objectives, and, thus, lead to the successful adoption of the intended DRE technology among the beneficiaries. The most common five good practices are listed below:

Formulate dedicated policies for DRE solutions with a long-term vision to provide market certainty.
Complement the vision with DRE-specific targets (embedded within national energy access plans and strategies) and legislative action, which are adaptive, both at the national and sub-national levels.
Ensure closer alignment between federal and regional agencies for effective planning and implementation.
Build capacity of agencies and organisations involved in design, implementation, and monitoring of DRE programmes.
Frame technical standards and regulatory frameworks to ensure the long-term sustainability of the DRE intervention

Figure ES1 Summary of emerging good practices for creating an enabling policy environment.

Source: Authors' analysis

Good practices to encourage active community/end user engagement:

In order to ensure a citizen-centric approach to the energy transition, community engagement is a critical part of DRE interventions. The analysis reveals three levels of community engagement beyond stakeholder consultations that can be adopted to achieve higher community participation. These include total buy-in from the community, a sense of ownership among the community members, and nurturing community leadership. The most recurring good practices that can further these objectives are:

Figure ES2 Summary of emerging good practices for active community engagement.

Source: Authors' analysis

Design with and for the community by involving them from the early stages of the intervention.
Anchor the projects with community institutions for quicker outreach and to gain greater trust.
Actively plan for community engagement across design, implementation, and monitoring to enhance the sense of ownership.
Invest patiently in the community’s capacity to spur local job creation and support the long-term maintenance of assets.

Figure ES3 Summary of emerging good practices for providing accessible and affordable financing.

Source: Authors' analysis

Good practices for providing accessible and affordable financing:

The adoption of DRE solutions is hindered by their substantial initial investment requirements. Access to affordable financing is essential at the programme, project, and individual-user levels. The case studies show that financing interventions have two common objectives: creating accessible financing options for the targeted beneficiaries and reducing the financing cost, especially initial investment costs. Good practices that can achieve either or both of these objectives are:

Extend “targeted” fiscal incentives to reduce upfront cost of DRE solutions. Public financing instruments (e.g. grants, concessional debt) are also critical.
Design tailored financing instruments rooted in local context and strengthen capacity of local financing institutions (e.g. cooperative banks, MFIs, banks) for long-term market development.
Leverage a diversity of capital sources (public, philanthropy, development finance, private capital) to reduce financial risks and unlock greater capital.

Figure ES4 Summary of emerging good practices on thriving market ecosystem.

Source: Authors' analysis

Good practices to enable a thriving market ecosystem:

A thriving market ecosystem that supports DRE technology is essential for achieving adoption at scale and long-term sustenance. Such a market system requires ensuring skilled resource availability, financial viability, access to markets, revenue generation opportunities, and availability and access to the latest cost-effective technologies. This enables greater consumer choice and better services for citizens. The good practices that are effective in enabling thriving market ecosystem conditions are:

Leverage DRE as an engine for job creation by complementing DRE initiatives with need-based skilling programmes.
Direct public support to market actors.
Build on the strengths of existing local markets and prevailing market ecosystems.
Invest in technical collaborations, knowledge transfer, and capacity building to support the local market ecosystem.

Figure ES5 Summary of emerging good practices on conducive environment for innovation.

Source: Authors' analysis

Good practices to create a conducive environment for innovations:

DRE is an emerging sector with many innovation opportunities on the technological, business, and financial fronts. A conducive environment for innovation can help reduce costs, enhance technology resilience, and create local economic opportunities. Two successful good practices to create a conducive innovation environment are:

Deploy targeted public interventions to accelerate and promote innovative and indigenous value chains.
Encourage and engage in cross-country partnerships at an early stage to trigger innovations in technology and business models.

D. Emerging lessons and recommendations

The analysis of DRE case studies around the globe has shown that there are similarities in the nature of challenges, particularly in the Global South, and that there is vast potential to learn from cross-country experiences. The good practices observed around policy, community engagement, financing, markets, and innovation may serve as an effective guide to designing new DRE interventions for policymakers, private players, and civil society. Based on these observations, the following recommendations are put forth:

DRE must be at the centre of just and inclusive global energy transitions since it has emerged as a resilient and cost-effective approach to augment and achieve energy access in many developing countries — as showcased by a wide variety of examples in this compendium.
As highlighted across several case studies, DRE should no longer be looked upon as a last-mile energy access solution but should be leveraged as a reliable and sustainable approach to meet energy needs for overall socio-economic development, furthering industries, agriculture, healthcare, education and job creation.
Public financing must address ecosystem-level needs of the DRE sector, such as skills and capacity building, awareness raising, supporting technology innovation and more.
The emerging lessons highlight the need for more active knowledge sharing across countries. G20 should strengthen its support for mainstreaming DRE solutions across the globe by furthering avenues for active knowledge sharing among private and public sector stakeholders across countries.

FAQs

Can DRE be leveraged DRE beyond energy access?

Progress has been made in improving electricity access and achieving universal energy access; as of 2020, almost 91 percent of global population have access to electricity (ESMAP 2022). However, we are not on-track to meet the 2030 goal and the progress has been uneven (IEA 2022c). The progress has been particularly impeded in vulnerable regions, such as sub-Saharan Africa, where the number of people without access continues to alarmingly grow (IEA 2022c). One of the key levers that can help achieve this goal are DRE solutions that are increasingly costeffective and easy to deploy, leverage local resources, can be tailored to uses across residential, productive use and institutional applications, and are environmentally sustainable. Meeting the energy needs, therefore, through DRE helps meet multiple objectives.
Why there is a need for compendium on ‘good practices to mainstream DRE for SDG7’?

While DRE has been around for a while, the sector is rapidly evolving with technological, business, market, and policy innovations. The effort of the compendium, which is a ‘practitioners’ guide on good practices’, is to showcase practices that can be replicated by planning agencies and help leaders and influencers in the public and private sectors mainstream DRE for achieving the SDGs. This practitioners’ guide attempts to compile and synthesise best practices from a wide variety of DRE interventions across the globe. If adopted at scale, DRE can help the G20 and other developing countries achieve more environmentally sustainable economic and job growth.
What key elements have been considered to capture emerging good practices to mainstream DRE for SDG7?

Different studies in the DRE sector mention policy, finance, community, capacity building, market, infrastructure, technology, and institutional engagements as being core to enabling the deployment of DRE solutions (IRENA 2022, WWF-India and SELCO Foundation 2015, CLEAN 2021). Accordingly, we have captured the DRE ‘good practices’ by deep-diving into five core elements that are consistently considered by the literature and experts as the most critical elements for igniting transition and transformation and promoting a thriving DRE sector in any region. These are, an enabling policy environment, active community engagement, accessible and affordable financing, athriving market ecosystem, and a conducive environment for innovations.
What support can G20 countries provide in mainstreaming DRE for SDG7?

G20 countries should support avenues for the active sharing of knowledge and lessons from DRE experiences to fast-track DRE deployments in the Global South. A key takeaway from the DRE case studies is that the challenges that impede DRE adoption remain similar across geographies to an extent. For example, diverse financing tools and mechanisms have been adopted by different countries to address the common challenge of affordable financing. These include PAYGO in Kenya, blended finance in India, and carbon emission reduction certificates in South Africa, among others. Accordingly, a lot can be learned from experiences across countries. Higher levels of global cooperation and partnerships for knowledge sharing can usher in a new era for DRE.