Market development for productive use of renewable energy in agri-food value chains
Productive use of renewable energy (PURE) offers the opportunity to lock in low GHG emission development pathways for rural areas of countries in sub-Saharan Africa and Asia, improving livelihoods, increasing income and building resilience to future threats such as the current triple energy, food and finance shock.
Standing in the way of scaling up PURE in agri-food value chains are challenges for actors at all levels: scant knowledge of the possibilities on most sides, nascent or early-stage markets for distribution and a lack of local financing solutions. The business environment in developing countries is often volatile, with a lack of coherence in policy, and market information for business plan development is uncertain or unavailable.
PURE Growth draws on the approach proven by the transition from REEEP’s design of the Beyond the Grid Fund Zambia (BGFZ, 2016-2022) into the Beyond the Grid Fund for Africa, now operating in six sub-Saharan countries, and on REEEP’s 2015-2017 investment portfolio, ‘’Powering Agrifood Value Chains”, which was a forerunner in supporting the water-food-energy nexus comprising eight high-potential SMEs active in Asia, Eastern Africa and Central America. REEEP is further utilising our expertise in taking early-stage markets from commercial demonstration through to competitive deployment at scale and applying it to the agricultural sector.
Agri-food value chains offer opportunities for enhancing low-carbon economic development and adaptation measures in a key sector to achieve SDGs and improve the socio-economic situation in target markets. We aim for increased adoption of PURE assets for marginalised groups with the potential to increase local yields, reduce post-harvest loss and add to local value creation and incomes, among other aspects. A variety of clean energy solutions have emerged, proving that off-grid renewable technology can be effective in these settings – e.g. cooling solutions extending the life span of agricultural yields or utilisation of biomass or similar for energy from agri-food production processes.
In other cases, the use of PURE appliances can create new business opportunities for people to become agri-food entrepreneurs, providing a processing service such as milling or pressing or cooling solutions such as solar-powered cold storage facilities where neighbouring farmers or fishing communities pay a fee to store produce. Such facilities can reduce waste, and there are considerable potential gains to be made in waste reduction: an estimated 30% of food produced globally is lost post-harvest.
The first phase of the programme is expected to channel EUR 10 million for financial instruments supporting the growth of SMEs and will focus on a market in sub-Saharan Africa. REEEP is in the process of determining the target country in consultation with our network of market stakeholders, including local governments, donors, private sector players, financiers and regional industry and expert networks. The second phase of market scoping in 2024 will inform the programme design and tailoring of the approach to the local market context.
Through direct support to private sector market players including impact-based financing and technical assistance that reduces business costs and risks and information gaps.
Through collection, aggregation and sharing of data, contributing to the reduction of risks, filling information gaps for the public and private sectors and providing evidence for impact and opportunity along with an increased understanding of trends and market characteristics.
Through structuring financial instruments to local banks, enabling them to engage in financing of green projects and businesses (including e.g. guarantees, hedging instruments, deferred payment letters of credit etc., depending on the market).
To support a coordinated improvement of market conditions in the medium-to-long term through policy changes, improved understanding of market characteristics, gaps and opportunities, as well as mobilisation of both international and local financial sectors and offering a basis for evidence-based decision-making.