Bringing reliable and renewable energy to off-grid communities alleviates poverty, improves climate resilience, and reduces deforestation. Why then is the world so behind on reaching SDG7? Why are 850Mn people living without access to reliable energy? The answer may be in an overlooked barrier to energy adoption – the high cost of electrical appliances.
Take Steung Chrov village in Cambodia – a community of approximately 105 households living on a floating village in the Mekong River. The majority of households rely on seasonal income from farming with many living in Relative Poverty. With earnings spent on the essentials such as food and fuel for transport, many cannot afford the initial cost of electrical appliances . For example, a typical 2L rice cooker to serve a family of four costs $32.
The high cost of appliances relative to income prevents clean energy adoption and as a result, energy consumption stays low making it a challenge for last-mile energy utilities to profit from selling energy.
If households cannot afford the appliances needed to utilize clean energy, the impact of sustainable energy access and SDG7 is capped
In Steung Chrov, which up till 2020 had no reliable energy access, households spent up to five hours a day collecting wood for their stoves, a burden often carried by women. Wood is continually collected in unsustainable ways destroying local habitats and biodiversity en route. Data shows that unsustainable practices will continue in these communities until affordable energy and appliances are made available to households.
In 2020, in partnership with DFID and Modern Energy Cooking Services, three rural villages in Cambodia, including Strung Chrov, were energized with Okra mesh-grid technology and gained access to Appliance Financing via Okra’s Harvest platform.
The mesh-grids are an asset-lite, modular method of bringing 24/7 energy to communities. Installed like solar home systems, they are then interconnected into a mesh network that redistributes energy and enables households to use higher-power, productive appliances. But, even with scalable energy access available, the barrier of initial investment required for such appliances is prohibitive.
In this project, 75 households across the three villages were offered the opportunity to purchase rice cookers, blenders, and hotpots via a low daily fee. With rice cookers costing $0.10/day for 340 days. Payments for energy and appliances are made simultaneously using the Okra app , and households without credit are temporarily cut off from power.
This program removes the need for upfront savings, encourages load growth, and results in reliable loan repayments.
“Households with access to productive Appliance Financing had 2.8X the average load compared to households that did not receive appliances.”
Households partaking in the Appliance Finance scheme used an average of 616Wh/Day, 2.8 times more than the 220 Wh/Day used on average by other households. The higher the load demand by households, the greater the energy sales and profitability of electrification for energy utilities – this indicates that financing appliances have a strong positive impact in increasing the commercial viability of rural electrification.
Investment in rural electrification has been slow, which is evident from the 850Mn people still without access to energy. If households cannot afford the appliances needed to utilize clean energy, the impact of sustainable energy access and SDG7 is capped. Just three months after the project launch, the findings are clear – Appliance Financing can help households overcome the initial barrier of high-cost electrical appliances and drive clean energy uptake and bankability . Enabling communities to experience meaningful impact, profits increase for energy utilities, making rural electrification more attractive to investors, and reducing dependence on high-pollutant fuels. A win for all.
Next month we will be exploring the local impact of rural electrification and Appliance Financing in Steung Chrov and surrounding communities – watch this space.