1. Programming for Rural Energy Services
 2. Energy and Rural Development
 3. Defining Productive Uses of Renewable Energy
 4. Eligibility for GEF Funding
 5. Guiding Principles for a PURE Approach
 6. Designing a UNDP-GEF PURE Project
 7. Lessons Learned from Rural Energy Programmes with PURE approaches
 8. Contacts 9. Definitions

Rural Enterprises

Some key issues in providing energy services for rural enterprises have been identified by an analysis of energy and productivity:

  • Informal and unorganized nature of enterprises : Many enterprises are located in the home, and these "cottage industries" tend to be overlooked because they are indistinguishable from other household activities.

  • Heavy reliance on process heat : A significant share of enterprises uses process heat, generated usually from wood or charcoal. Given the focus on electricity supply within energy planning, it should not be forgotten that for many of these applications, electricity is not the most cost effective option. Drawing on the end-user's experiences and working in partnership to develop tailored uses of RETs will provide technologies that have a sustained use and thereby create a market; they match the needs of users who are prepared to invest scarce cash resources to acquire them.

  • Energy's contribution to sustainability of rural enterprises: The role of energy in the sustainability of enterprises is not well understood, particularly not in the informal sector. In food processing enterprises it has been estimated that energy costs are 20 - 25 per cent of the total inputs. However, for most other industries, there is practically no data available on how much energy is being consumed and what its role is in their start-up/ shut down and sustainability. In general, energy is considered a significant cost factor and small industries generally buy their fuel, even in rural areas. Small enterprises can be severely affected by rising energy costs, fuel shortages and deforestation, which would suggest that technological interventions could increase the scale and profitability of these businesses. Since fuel is a significant cost factor, there is a commercial motivation to improve the energy efficiency of the production processes. Furthermore, deforestation and increasing fuel costs force them to resort to inferior fuels, leading to adverse health impacts.

  • Importance of complementary inputs : Complementary inputs, encompassing non-energy inputs to rural infrastructure (roads, communication, water supply, market information and access, access to credit, etc.) are extremely important and need to be considered to a greater extent in the PURE approach.

  • Importance of organization and management : Energy is one of the many factors of input that influence the performance of small and medium enterprises. Poor people are typically marginalized from decision making and suffer barriers related to illiteracy, lack of exposure to information and training . The ability of the poor to generate livelihoods from micro enterprises is constrained by not only energy factors but also non-energy related factors, such as high marketing costs - and even access to markets; and the informal nature of these industries which makes it difficult for them to access credit, equipment and other support services. The low rates of return prevent inward investment, hindering innovation and expansion, which are regarded as key factors in enterprise sustainability. There is to date little research to explain what forces drive these start-ups and shutdowns, and the role of energy in their sustainability.