As part of the Global Off-grid Solar Finance Summit in December 2021, GOGLA organised a virtual boardroom to discuss how off-grid solar (OGS) contributes to adaptation and resilience, how the sector can build a common narrative and develop a framework to help unlock climate finance. The boardroom, in partnership with Efficiency for Access and Catalyst Off-grid Advisors, convened leading off-grid energy investors, lenders, enterprises, governments and development partners to share perspectives and experiences. This blog shares the highlights of the discussion and summarises next steps for the sector.
Image: Peter Arwa/Futurepump
Off-grid solar (OGS) has long been hailed as a tool for climate change mitigation – replacing polluting kerosene lanterns or diesel generators with clean, sustainable alternatives. Every ton of CO2e avoided is a welcome contribution, though beyond this, access to modern energy services can have an even greater impact on helping vulnerable communities adapt to the effects of climate change and build resilience to climate-related shocks.
2021 was a year of devastating floods, droughts, wildfires and other extreme weather events that highlighted the need for greater action on adaptation and resilience. At COP26, we saw the strengthening of the Global Goal on Adaptation and unprecedented calls for action and commitments from governments and global institutions. Adaptation cannot be the neglected half of the climate equation. In 2019/20 less than 10% of climate financing went to adaptation, with the majority of funds going to large infrastructure projects in developed and middle-income economies. COP26 secured $100 billion per year in climate finance by 2023, and a promise from the investment community of greater equity for developing countries and parity for adaptation funding. This is an opportunity for the off-grid solar industry.
In December’s boardroom, attendees explored how the off-grid solar industry can build an adaptation and resilience narrative; define, demonstrate and measure its impact; and unlock climate finance for energy access. Here are some of the key take-aways for the industry:
Off-grid solar plays a vital role in adaptation and resilience for vulnerable communities
People living without access to electricity are vulnerable to climate change and are feeling the effects. Already this year, almost 200,000 households in southern Malawi are dealing with the aftermath of Tropical Storm Ana, which flooded large parts of the region, destroyed houses and crops, and wiped out 30% of the country’s electricity generation capacity.
Access to electricity from off-grid solar products can help people adapt and become more resilient in a variety of ways, including income diversification and access to digital services. Beyond this, solar water pumps help smallholder farmers increase crop yields and profitability while adapting to unpredictable rainfall patterns; cold chain technologies strengthen agricultural value chains, enhance food security and support health interventions; and access to radios and mobile phones helps disseminate climate information and early warning systems.
At the boardroom event, EEP Africa presented highlights from its study into the climate co-benefits of off-grid solar products and services. In rural Kenya for example, solar water pumps and irrigation systems distributed by SunCulture have been shown to increase crop yields by up to five times while reducing water usage by up to 80% for smallholder farmers. Over 90% of customers reported improved quality of life.
Despite this growing evidence, the attendees agreed that the industry does not yet have a clearly defined narrative on how OGS products and services contribute to adaptation and resilience, and companies struggle to communicate this impact. A compelling narrative that uses language that appeals to climate financiers and related sectors such as agriculture is a vital next step for the industry.
A framework for adaptation and resilience can lead to improved performance and unlock pathways to climate financing
A compelling narrative will provide a foundation on which to build a framework to enable companies and investors to measure, monitor and report their impact on adaptation and resilience. Companies will also gain the ability to evaluate their performance, improve business models and adapt product and service offerings for even greater impact for consumers.
Experts in the boardroom showed broad consensus on the characteristics required for such a framework. Unlike avoided CO2 emissions, metrics for adaptation need to allow for context-specific outcomes. A measurement framework should be flexible, realistic for company implementation, local and end-user focused, and go beyond financial and output-based measurements.
Adaptation relates to a locally defined set of activities within a specific climatic context, meaning that metrics need a consumer-level lens. For example, we know that the most vulnerable people are at the greatest risk from climate change. Therefore, any framework should tell us not just how many people have accessed modern off-grid energy services – but who specifically is being impacted. Likewise, access to solar water pumps needs to be measured in such a way that includes the risk of maladaptation (therefore – suitability to local environmental and geographical factors). An industry adaptation and resilience framework should therefore look at end user needs, ensuring that indicators such as wellbeing, food and water security, and quality of life are also included.
Boardroom participants stressed that metrics should be forward looking with a tolerance for ambiguity and consider the practicalities of implementation. Existing frameworks such as the Race to Resilience metrics, ICF KPIs and BFA’s Digital Finance for Climate Resilience can be used as a basis from which to develop sector-specific metrics that meet the criteria outlined above.
During day 1 of the summit, Samir Ibrahim, CEO and Co-Founder of SunCulture, highlighted the lack of standardisation in the measurement of climate adaptation and resilience as one of the barriers to connect with investors: “If we can figure out a way to create standards, it would catalyse a lot of climate finance and create more efficient capital flows.”
Climate finance for adaptation and resilience is available, but not easily accessed by OGS companies
Developing an industry narrative and building a standard framework to measure adaptation and resilience in the off-grid solar industry can catalyse climate finance and boost impact.
Historically, OGS companies have encountered difficulty in accessing climate finance from multilateral funds due to complex application processes and burdensome monitoring requirements. Attendees agreed that accessing such funding via targeted vehicles and Development Finance Institutions would be more promising although noted that more awareness raising with key stakeholders is needed. Examples including the Cooling Facility, implemented by ESMAP, and the Energy Access Relief Fund (EARF), a multi-donor fund led by Acumen and managed by SIMA, show how specialised funds can leverage financing from the likes of Green Climate Fund (GCF).
New challenge and grant funds are also emerging, including the recently launched GSMA Innovation Fund for Climate Adaptation and Resilience, EEP Africa and Africa Adaptation Acceleration Program. Such funds can serve as entry points for the OGS sector to access climate funding and support industry efforts to develop a framework and demonstrate impact.
Next steps for the industry
The boardroom meeting in December was the first step in bringing the off-grid solar industry together to advance adaptation and resilience and unlock climate financing. Here’s what the industry can do next:
- Increase awareness of how access to electricity through OGS products and services can contribute to adaptation and resilience for climate-vulnerable people, and align the narrative with other stakeholders in connected value chains (e.g., agriculture, health). Coordination and communication of the messaging is needed amongst companies, investors, governments and development partners.
- Develop a standardised framework for adaptation and resilience, based upon more research and evidence. Co-development with industry-wide partners will ensure it is aligned with on-the-ground realities and that there is buy-in from donors, but will likely require funding to support research and coordination efforts.
- Build awareness of the potential contribution of off-grid solar to climate goals amongst designated country authorities and influence National Adaptation Plans of Action (NAPAs).