Remarks by Rockefeller Foundation President Dr. Rajiv J. Shah at the India Energy Access Summit
February 12, 2018
As delivered on Monday, February 12, 2018, at New Delhi, India
Thank you very much. I also want to thank my friend and former colleague, Mark White, with Shri Desh Deepak Verma and so many other ambitious leaders on behalf of fighting and ending poverty here in India and around the world.
I’ll tell you, on a personal basis, half a century ago, when my grandfather put my dad on a plane to America, I doubt it that they would imagine that I’d be back here representing The Rockefeller Foundation – which has done so much over the last many decades, with and in partnership with India, from agriculture to health care to improving the state of civil society and gender equality, to today a real focus on fighting energy poverty here and elsewhere around the world.
It is a special privilege to represent The Rockefeller Foundation, because this institution today, as we have before, focuses on bringing science and innovation, data, analytics, and the tools of advancement, to the fight against poverty and to everyone no matter where they’re born or where they reside.
India has come so far since the days when Rockefeller worked on the Green Revolution here. Its economy will grow at nearly 7 percent this year, which could be higher but it continues a two-decade trend of relatively rapid growth and economic convergence. India has moved nearly 150 million people out of poverty in that timeframe, and it’s our shared desire to continue that progress. There’s really no reason why India should not be the world’s leader in ending extreme poverty once and for all, beating the Sustainable Development Goals by a considerable margin, and doing it by first ending energy poverty here throughout the country.
See, because energy is not only critical to human well-being as we’ve heard about this morning; it is the undercurrent of a thriving economy. We all know how electricity lights our homes – every now and then they turn the lights up and it even lights this room – but in reality, the real power of energy and electricity and access is to drive productivity, growth, and poverty reduction, as we heard from the outstanding woman who was speaking earlier today. And as such, we think it’s essential, frankly, that the world redefines its understanding of poverty in energy terms.
Ever since the idea of ‘the poverty line’ became an important global construct nearly 100 years ago – not long before India’s first power stations began whirring to life near Darjeeling and Kolkata – poverty metrics have been dominated by questions of income, and in an underlying way defined by what it takes to consume 2,000 or 2,100 calories a day. Metrics and measures have been refined over the course of the 20th century, but these models all basically were based on human intake of food and nutrition. And when a sizeable percentage of the world’s population, and the population here in India, was, in fact, facing severe hunger and starvation, that seemed appropriate, to define poverty in calorie terms. But today it is not. Today that definition is insufficient for a 21st century economy that is fundamentally connected to and will someday help define the global commons.
It was one thing when a rural villager had little or no link to the outside world. But today when anyone can follow their favorite Bollywood stars on their phones and can see and aspire to a global well-being that is appreciated and more connected, we should be defining poverty not in calorie terms but in terms of energy access.
And in fact, in that regard, we have to be more ambitious about our goals. If you can live in a community with indoor plumbing, lighting that will help keep you safe at night, it helps, as we heard, children study without needing kerosene. Distributed solar power is clearly very important, as we heard from households and from consumers. And that’s critical.
But in reality, productive power that helps people move out of poverty is something slightly different. The world is defining ending energy poverty by 2030 in terms that are not as ambitious as we think they are.
The most common baseline metric for whether someone has “access to modern electricity,” is whether they’ll consume 100 kilowatt-hours per person per year in urban areas, and half of that in rural areas. This is deeply insufficient: 100 kilowatt-hours per year is just enough to power a single light bulb for five hours a day and to charge a mobile phone. It doesn’t measure quality, reliability, or predictability. And it doesn’t enable an impoverished household to progress from enjoying important social benefits of electricity, to genuinely improving their living standards and fighting poverty through growth and opportunity.
If well-planned, electrification can be a huge enabler of economic development; in fact, it has always been so. But to drive real productivity depends on how, and how much, power is being consumed. We start to observe more significant gains in economic productivity with the use of appliances, mechanized tools, and industrial machines, which consume progressively higher energy loads.
For example, an electric sewing machine lets Rajni, a seamstress in Kamlapur, make more bags each day, augmenting her income so she can buy schoolbooks for her children. And Siyaram, a carpenter in one of our programs in Bihar, has more than doubled his productivity, hiring two more workers, and increasing revenue and profits 20 percent, all thanks to a combi-planer machine that drills, grinds, and shapes wood. This machine consumes 2.5 kilowatts per hour – over 60 times more power than the average light bulb. If his energy access was limited to 100 kilowatt-hours per year, Siyaram would only be able to use this machine for merely 40 hours a year – barely a week’s worth of work.
And compare that to the power consumption needs of truly industrial-scale enterprises, like a factory or a data center, which can easily use upwards of tens of thousands of kilowatt-hours every single year. So we are setting the bar too low.
According to the Center for Global Development, a more realistic measurement of modern electricity access should start around 1,500 kilowatt-hours per person per year. Urban households in India already consume that much power – but consumption in rural households [with electricity] is likely closer to half of that amount. And for all the strides India has made in recent years, nationwide consumption per capita is still hovering around only 1,000 kilowatt-hours – less than one-third the global average.
So when we think about the intrinsic relationship between energy consumption and development, we simply have to be more ambitious.
As we sit here in this room, a shocking 1.2 billion people around the world still have limited or no access to energy whatsoever. Nearly 300 million are here in India – about 80 percent of whom live in rural areas. And I expect that if we were to use the higher threshold of 1,500 kilowatt-hours per year, that number would be significantly higher. That may have been tolerable in decades past, but it doesn’t work for the modern India that we all aspire to build today.
In fact in the United States, the projected levelized cost of electricity for solar power has fallen by over 80 percent since 2011, and over 60 percent for wind. And here in India last spring, wholesale solar power prices reached a record low, dropping 40 percent in a year to only 2.62 rupees per kilowatt hour. Frankly, with power that cheap, abundant, and accessible, there is no excuse for not making sure that every single person has enough power for productive use.
So how do we get there? From the earliest days, all around the world, every single economy that has dramatically solved its rural power challenges has done so through real public-private partnership. In the United States, we famously cherish the history of public works like the Hoover Dam. Those experiences have been repeated around the planet.
We at The Rockefeller Foundation, here in India see two basic approaches for achieving the kind of universal energy access that drives economic productivity. And both options require partnership between the public and private sectors.
One approach – which all of us here know well, and what we’ve been discussing this morning – is deploying decentralized renewable energy solutions to serve off-grid populations for both productive and domestic use. In fact, The Rockefeller Foundation started our power initiative here in India, and we prioritized this very specific approach because we wanted to see electrification as an enabler of economic opportunity from the outset.
Through our non-profit subsidiary, Smart Power India – which is represented here this morning, and which we launched three years ago – we’ve incubated several models with private energy service companies to extend electrification through mini-grids that are now powering more than 120 villages in some of India’s most energy-starved states. Fueled by a network of partners, Smart Power India has energized 5,000 enterprises and is transforming the lives of more than 45,000 Indians. Together this partnership has supported the growth of the largest cohort of solar mini-grids in India, and by some counts, the world.
As decentralized electrification continues to be an important part of India’s energy access story, we will remain committed to this approach. And I’m proud to announce two new announcements today that will help accelerate this trend.
First, we recently closed a deal to support Husk Power Systems to build nearly 50 more mini-grids here, based on a model we developed together to ensure a steady and reliable flow of electricity for small- and medium-sized enterprises. Husk has an ambition to build at least 300 more mini-grids in India and Africa over the next four years, and we’re proud to be making a contribution towards that goal.
Second, we are making a $3-million-dollar investment in cKers Finance – which is a new, specialized sustainable energy non-banking financial company that seeks to bring India’s distributed renewable energy businesses to scale. cKers will provide access to financial products at reasonable rates and flexible terms, to help distributed renewable energy operators grow and accelerate their reach.
We’ve learned a lot from our mini-grid journey over the last several years, and it’s been inspiring to see some of these experiences expand into places like Nigeria, Tanzania, and Myanmar. But we’ve also learned that while mini-grids can have an enormous impact on economic life, they won’t always be the most cost-effective solution, especially where grid infrastructure is closest and rapidly expanding.
In some countries in sub-Saharan Africa, for example, a rural mini-grid connection can cost less than half the price of a connection to a main grid. But here in India, a new mini-grid connection can cost up to 1,000 rupees compared to a grid connection that in some states, like Uttar Pradesh, can be subsidized to cost nothing for families below the poverty line. And we know that the per-unit price customers have to pay for a mini-grid, or for mini-grid power – as high as 28 rupees per kilowatt-hour – is just too high compared to the price of grid energy, which can cost between 1 and 6 rupees per kilowatt-hour.
We’ve seen time and again that people are in fact willing to pay these higher costs for reliable electricity, and sometimes much more – but it’s yet another example of the injustice of poverty, and how expensive it is to be poor. A person living in a distant village in Bihar simply should not have to pay more for their electricity than a city-dweller in Delhi or Mumbai pays for theirs. Because everyone deserves equal access to a modern economy.
That’s why we at the Rockefeller Foundation are exploring a second approach – one that recognizes the central role that India’s rapidly-expanding grid can play in accelerating rural electrification through public-private partnerships.
Since we began our power initiative here, India’s energy sector has experienced a huge transformation. Prime Minister Modi’s government has done an impressive job extending the grid, with infrastructure expanding faster than many expected. In the last five years, transmission lines have grown by nearly 30 percent, and substations by more than 40 percent. Meanwhile renewable generation capacity has doubled, with solar power capacity alone increasing more than 12-fold in that time.
But this breathtaking progress has brought the challenge of last-mile distribution into stark relief. Today only 1-in-5 distribution companies are meeting the government’s own targets for controlling technical and commercial losses, and many of them are incurring losses of 30 or 40 percent or more. And in three of India’s five most populous states, more than 45 percent of rural households are still un-electrified. Getting power into homes and businesses at the village level is a totally different challenge, and ultimately the defining one for energy access here in India. Because only when we connect the country’s 300 million underserved consumers will we see the emergence of economic development that truly reaches everyone.
Today we see a unique and exciting opportunity to build on our experience with mini-grids by working through new, innovative public-private partnerships. We see how this has worked in places such as Odisha. And we believe it has the potential to accelerate electrification for not only tens of thousands but tens of millions of unconnected Indians.
Through Smart Power India, we will partner with government agencies, distribution companies, and rural energy service companies to develop, test, and scale-up new customer-centric rural electricity distribution franchises. These will apply the expertise of the private sector in serving rural customers, while also leveraging the expanding grid infrastructure and government incentives and tariffs that dramatically bring the cost of power down for these households. And the result, we hope, will be an acceleration of last-mile electricity distribution. By bringing together grid infrastructure with the resources and know-how of the private sector, we are convinced this work could impact at least 25 million individuals in rural India – six states – in the next five years.
There’s reason to believe these types of goals are achievable. Just five years ago we would have been surprised to hear of the tremendous progress we’ve made with distributed solar models here today. And five years from now, if we’re successful with this approach – of dramatically expanding grid-based energy to these very households at a low cost so their consumption can go up dramatically – that undoubtedly will serve as an example to the rest of the world for a pathway forward for ending energy poverty.
And that’s what India has done so well, decade after decade. Through innovation, public-private partnership, determination, and the focus of communities like those of you in this room, India has pioneered ways to reach tens of millions of people at a time with new approaches to fight poverty. And those examples give us all the confidence that we can, in fact, work together and end extreme poverty once and for all.
Thank you and thanks for your commitment to be here. And thank you for having me.
# # #