GEF Focus

Developing sustainable markets for RETs where they are most needed - in remote and often economically poorer areas without any other access to modern energy services - poses a challenge. One way of addressing this challenge is to stimulate markets for RETs with a broader market and community development approach in mind. This approach is based on two principles:

• Greater attention is paid to energy services that generate additional income as this potentially reduces the need for risky finance mechanisms. Also, since a l ow load factor increases costs considerably, there is a greater emphasis on increasing the affordability of energy systems by linking them to a secure base load source of demand, such as a local enterprise, irrigation or water pumping.

• Larger groups of people are targeted for access to energy services through institutional and social services. By doing this, the poorest segments are also benefiting from access to energy services as part of broader community development.

GEF has, thus, redirected its efforts towards integration of RETs solutions into rural development efforts for "productive use" (in an economic or social sense as explained subsequently) of energy services. The goal is to create entry points for further market development, that is, building a supply chain and creating a certain threshold volume of RETs applications. Once the market has matured and stabilized, and a reliable supply chain including quality control, maintenance and so forth has been established, strictly consumptive use of RETs might stimulate further demand. This approach allows addressing economic growth, social equity and climate change issues at the same time.

The figure below illustrates a model for rural energy supply that meets the challenges of rural development.