Rural sub-Saharan Africa (SSA) is the global poverty hotspot, with rural communities relying on smallholder farming as the main source of income. The lack of access to irrigation water and electricity makes farmers particularly vulnerable to climate-related stressors, also threatening communities’ food security. While there are several barriers to rural electrification – first and foremost its capital intensiveness and low profitability – a rural electrification approach based on renewable energy could be a game changer to generating local income, more energy investments and development in rural communities.
Energy and development gaps in rural Africa
In sub-Saharan Africa (SSA), 80% of agricultural production comes from smallholder farmers. Extensive rain-fed agriculture accounts for more than 90% of agricultural land. Unpredictable and erratic rainfall patterns are a leading cause of low agricultural productivity, which results in cyclical famines, persistent poverty traps and limited local development opportunities.
While often left at the side of the agenda of climate policy summits – such as the forthcoming 27th United Nations Climate Change Conference, to be held in Sharm El Sheikh, Egypt – these issues are deeply related to the ongoing climate crisis. Despite its marginal contribution to global greenhouse gas (GHG) emissions (sub-Saharan Africa accounts for less than 5% of total global greenhouse gas emissions1, while representing 15% of the world population), rural African dwellers live in the most exposed human systems. The impacts of climate change – namely their direct and indirect impacts on agricultural systems – are increasingly felt. For instance, climate change is increasing the likelihood and intensity of hydrological extreme events, such as droughts, or even locust outbreaks, thus threatening harvests and farmer livelihoods while creating conditions for perpetuating humanitarian crises.
To halt this downward spiral, it is crucial to provide large and exposed populations of SSA (about 1.1 million people, 60% of which are rural and projected to double by 2050) with the technological means and knowledge required to adapt to increasing socio-environmental challenges and demographic pressure. Among other critical infrastructures, the provision of modern energy services is a core asset for rural dwellers. In such context, this contribution focuses on the potential role of decentralised renewable energy to protect millions of rural dwellers from hunger and poverty, also considering their capacity to adapt to ever-increasing climate change stressors. In parallel, it highlights how the prospect of increased revenues in the agricultural profit may provide an incentive to energy access investments.
The potential role of renewable energy in transforming African agriculture
An energy-poor, lowly mechanised agricultural sector is a major barrier to rural development. For instance, the lack of electricity is often a barrier to irrigation, which can increase yields, allow cultivating more profitable crops and expand growing seasons. In addition, mechanised crop processing, such as grinding and milling of cereals, can support farmers by increasing their production value and revenues. Finally, some of the most profitable crops, such as vegetables, need to be preserved in cold storage facilities to reduce waste and be sold at higher prices. Together, these productive energy services can add significant economic value to local yields, reducing food waste and, thus, increasing farmers’ income and welfare.
Decentralised renewable energy systems are particularly suitable for achieving an electrification of the agricultural value chain in the context of rural SSA. The reason is that renewable energy is widely available at a low cost in the region, mainly as solar photovoltaic but also as small hydropower, biomass generation, wind energy, and geothermal energy systems (depending on local contexts). The decentralised nature of renewable energy sources allows to consider the option of standalone, localised grid systems, which do not need to depend on (or be interconnected with) the main national grids, often remote from rural communities and, hence, susceptible to provide unreliable electricity supply. In contrast, as decentralised systems can operate autonomously, they are much less affected by external shocks in supply reliability, or energy prices, including potential geopolitical impacts on the energy sector. In addition, renewable-based systems may contribute in promoting sustainable development, both in terms of cutting emissions – as such systems rely on clean energy sources, reducing dependency on standalone fossil fuel-based generation – and through their role in achieving the different goals set by the United Nations Sustainable Development agenda.
Against this backdrop, the adoption of a Nexus approach in the design of energy access policies and business models is crucial in achieving the energy-related objectives pursued by SDG 7 (Affordable and Clean Energy) in the developing world, chiefly in SSA. As the lack of access to electricity predominantly affects rural areas, along with extreme poverty and food/water insecurity, such dimensions clearly appear as tightly interlinked. Hence, the question of how to electrify smallholders’ agricultural activities plays a key role in the universal electrification debate. This discourse should be centred on energy use and services, rather than on energy supply systems per se.
Financing energy access investment with“Nexus” business models
The main barrier to rural electrification is the capital-intensiveness of power supply infrastructure, among sparse communities with low demand density and insecurity of payment. So far, public governments have largely been unable to convey the required resources for infrastructural investments and private stakeholders have generally been unwilling to pursue risky and unprofitable household electrification programs.
Traditionally, energy access programs and development indicators have mostly prioritised the residential sector, an approach which has struggled to prove financially sustainable and, thus, effective. It is increasingly acknowledged that productive uses of energy (i.e., its use for income-generating activities), as well as the so-called ‘anchor customers’ are key to financial viability of electricity access expansion projects, to create a commercial investment case. Indeed, such customers have a better ability and willingness to pay, besides their revenue generation potential. Targeting the agricultural sector – mostly employing rural dwellers – may open very promising perspectives in this sense; at the same time, it may help solving some crucial, food-related development challenges.
Only recently have some public institutions devoted specific attention to opportunities for electrification in agriculture. A relevant example is the Access to Distributed Electricity and Lighting in Ethiopia project, funded by the World Bank in 2021. The project has a strong focus on closing the gender gap in the energy sector and increasing the percentage of women participating in the mini-grid sector and off-grid technology value chain. Another recent large-scale program in this direction is the Yeleen Rural Electrification Project in Burkina Faso, approved by the Green Climate Fund in 2018 and devoting specific focus to productive users in rural areas. Within the scope of this project, micro-finance institutions are encouraged to provide loans to productive users in the areas where solar mini-grids will be installed.
Figure 1 introduces a conceptual model to leverage the geographical overlap of agriculture-energy access-development gaps in rural SSA. The flowchart shows a paradigm where rural electrification aims at increasing agricultural profitability, rather than being centred on a conventional, ‘household electrification first’ paradigm. Indeed, increasing farmers’ income locally might imply a significant potential, both to enable rural development and to provide the necessary incentives/guarantees for private investment in energy access – including less profitable segments, such as residential and public services.
Figure 1: Framework of the proposed energy access, agricultural profitability and rural development integrated approach. Source: Falchetta (2021)
According to the proposed mechanism, the provision of electricity through decentralised systems, such as standalone photovoltaic (PV) systems (with or without storage) or RE-based mini-grids (i.e. biomass, PV, wind, or hydro-powered) can enable energy services, which, in turn, can boost agricultural profitability. An instance is the access to on-demand water pumping for irrigation in case of insufficient rainfall. Indeed, crop water stress results in decreased yields and lower product quality. This is even more relevant under the expected negative impacts of climate change on crop yields. Recent work has assessed the potential for sustainable irrigation expansion, either over croplands facing ‘agricultural economic water scarcity’ or wherever irrigation is not in place due to socio-economic barriers, despite of water availability from rivers and lakes. This research has shown that sub-Saharan Africa is the region with the greatest potential for irrigation expansion, under current and even warmer climate conditions.
Similarly, post-harvesting crop processing activities, such as milling, could be carried out, at least partly, in proximity of farming sites (e.g., by local smallholder consortia co-owning mechanical processing machinery), to retain a greater share of the final retail price value. Indeed, beyond meeting subsistence needs, smallholder farmers usually sell their crops raw, for a low price at wholesale markets, where large (often international) corporations purchase them in bulk, to sell processed products at significantly higher prices.
Properly designed business models targeting these interactions should promote decentralised electricity access systems, to be purchased and installed in combination with agricultural productive appliances. Hence, to leverage the virtuous paradigm proposed in Figure 1, decentralised energy developers are increasingly seeking to sell bundles, for instance by microfinancing appliances and machinery, acting as buyers of local agricultural outputs and selling in economic hubs. A relevant example is the “Pay-n-Pump”solar-powered irrigation pilot model, where farmers can use a solar water pump owned and installed by a private company as a pre-paid service with a fee per unit consumed that includes lifetime maintenance and irrigation training, thus overcoming the barrier posed by the lack of capital for upfront investment in installing the system. Eventually, farmers can purchase the pump on a lease-to-own basis with an affordable deposit and monthly instalments.
Energy decentralisation and rural development: a win-win paradigm
This short contribution has highlighted how targeting renewable energy investment into the agricultural value chain of SSA might be a winning paradigm, both for promoting rural development and to make a sustainable business case for private developers of decentralised energy systems.
Development in the agricultural sector, through increased and more stable yields, could trigger development sparks in a broader rural community ecosystem, such as an improvement in nutrition and food security (SDG2). Then, clean energy access and mechanised agriculture would help reaching a number of sustainable development targets, such as reduced poverty (SDG1), health outcomes (SDG3), equitable and inclusive education (SDG4), improved livelihoods and local economies (SDG8), as well as climate change mitigation and adaptation capacity (SDG13). Altogether, these transformations would also contribute in reducing rural-urban and gender inequalities (SDG 10) and mitigating potential conflicts driven by food/water security concerns (SDG16). Gender-related issues are of particular relevance, given the stark inequalities between men and women in rural SSA, similarly to employment and wage, various activities, education and asset ownership, including a lack of access to clean cooking. As an additional co-benefit of increased agricultural profitability, smallholder farmers could be less exposed to pressure by large private groups for large-scale land acquisition, which are surging in SSA, entailing potentially detrimental effects on food security.
Provided a set of conditions is satisfied, an agrarian transformation fostered by renewable energy services may be a spark for broader infrastructure investments and technological change. In the long run, these processes might trigger structural change dynamics, such as the rise of secondary and tertiary sectors, among communities that are currently depending on the agricultural sector as their only source of income.