Harvesting Sunshine

Income-generating productive uses of energy (PUE) allow rural entrepreneurs to utilize clean electricity to support their businesses and increase their incomes. PUEs also boost revenues for rural utilities struggling to achieve profitability and maintain reliable energy services because of limited demand. The Energizing Agriculture Programme (EAP) recognized PUE’s potential to transform livelihoods and improve the economics of energy access. It brought together Nigerian energy and agriculture companies to design and test business models that deliver affordable PUE equipment to rural customers. The EAP confirmed the value proposition of PUEs. By switching from fossil fuel-powered equipment to electric PUE alternatives, agribusiness owners saved up to 82 percent on their energy costs. In one year of operation, a $61,000 investment in PUE yielded 2x in value-added commodities for their businesses. Similarly, PUE deployment benefits minigrid developers. Our analysis shows that the largest energy-consuming PUE, a 3-ton cold room, increases electricity sales enough to drop the levelized cost of energy by 25 percent. A minigrid serving multiple PUE loads can produce electricity at half the cost of a minigrid serving predominantly residential customers.

This report narrates the EAP’s experience deploying and operating 269 mills, freezers, electric vehicles, and other agricultural equipment at rural minigrids in Nigeria. It also distils the lessons learned from testing business models that deliver integrated energy-agriculture solutions in rural contexts. The report provides a set of recommendations for public, private, and philanthropic partners to realize the opportunity that PUEs offer at scale across Nigeria, including the following.

1. The government should ease PUE companies’ supply chain and resource challenges by exempting equipment from import duties, extending state financial and advisory support, and establishing quality standards.
2. PUE companies must build their rural O&M capacity, invest in data collection on customer needs, and improve their pay-as-you-go offerings to boost affordability.
3. Minigrid developers must support PUE and energy supply in tandem by identifying opportunities before construction and building the necessary partnerships to realize them.
4. Investors must support nascent companies through working capital loans, inventory finance, credit guarantees and equity investment to avoid them being overburdened by interest payments.
5. Donors should focus grant support on non-revenue-generating activities critical to the PUE industry’s success, such as needs assessments, PUE coordination platforms for funders, and industry associations.

Learn more about the impact that the EAP has created in communities here.

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