Two critical power sources for clean energy access in the Global South

The COP28 agreement to “transition away” from fossil fuels introduces new urgency to develop and scale alternative energy sources, especially in emerging markets. The path ahead must also secure economic empowerment for millions of people across the Global South, to ensure the agreement lives up to its mandate to transition in a “just, orderly and equitable manner.”

Solutions that meet the needs of the climate while supporting global development goals on poverty, gender equity, and access to energy require innovation and creativity to create sustainable and scalable outcomes. Based on more than two decades of work within the Global South, Shell Foundation (SF) has identified two untapped power sources that should be primed to deliver breakthroughs in clean energy access:

1. Gender equity – through designing female empowerment into the methodology and goals of investments, especially in the transport and farming sectors.
2. 
   Financial flexibility – through the creation of new and innovative financial products that steer global climate finance directly into the hands of those most affected by climate change.

Both sources highlight the need for blended, symbiotic partnership models that adjust for respective risk profiles, experience and expertise, and leverage local knowledge and reach to create deep and sustainable impact at scale. Shell Foundation’s partnerships have already invested in climate technology projects with vast opportunities to scale but these represent only a small portion of what could be achieved for people as well as the planet.

Investors can strengthen the link between clean energy and gender equity through sector-specific investment. In South Asia and Sub-Saharan Africa, where women’s participation in the workforce is disproportionately within the informal economy (compared to other regions), investors will need to look deeply into sector and labour market trends to support opportunities for advancing gender equity through clean energy access.

S4S Technologies, a food tech start-up, has partnered with Shell Foundation since 2018 to scale its climate technology in India and around the world. S4S utilises a revolutionary solar dehydration technology at an affordable price for rural communities, ensuring they can process their food onsite and reduce waste. SF’s investment in S4S’s work has already yielded benefits for over 300,000 female smallholder farmers, including a 10-15% increase in their profits.

S4S is ensuring the empowerment and inclusion of women throughout the sector. The farmers partner with women micro-entrepreneurs to turn their agricultural products into goods, boosting local economies and gender equality through double or even triple income growth. Over the next four years, SF will continue partnering with S4S to scale their work and expand outreach to three million smallholder farmers and 30,000 entrepreneurs.

Investors in clean energy know that efforts to reduce global emissions must tackle the high-emitting transportation sector, a traditionally male-dominated industry with barriers to entry for women, including lack of bespoke mobility solutions designed for women and access to finance for vehicle ownership. In India, SF’s research of Delhi-based urban transporters found that only 7% of 483 drivers were female. At Shell Foundation we are exploring bespoke solutions to reach women in the transport sector, and also looking to leverage the growth of the electric vehicle sector to increase gender equity and clean energy access by looking beyond simply ‘women as drivers’.

Kofa, a Ghanaian-based energy company, for example, is empowering women through its cutting-edge portable battery network. Kofa saw a gap in the market for a dependable mobile, clean energy network.

The first step on its journey was the creation of an electric motorbike that runs on swappable, rechargeable batteries. However, the swappable batteries can power more than vehicles. Female micro-entrepreneurs in the region use them to provide energy for their businesses, which means greater profits for them and their families.

Margaret, affectionately known as Auntie Maggie, is a Kofa micro-entrepreneur. Auntie Maggie is a franchise owner of a Star Assurance Kiosk at in Accra. Her kiosk is more than just a business spot; it’s a serene island amid the relentless drone of diesel generators.

By rejecting the traditional generator for the Kofa Kore 1 battery, Auntie Maggie’s expenses have plummeted by 80%. In this bustling park, Auntie Maggie’s kiosk stands out as a testament to innovation making a real difference.

Rural communities in the Global South, far removed from their countries’ socio-economic centres, need accessible tools for income generation and steady energy access. Global investors seeking opportunities to scale clean energy access in Africa should also consider tools that can facilitate financial flexibility for consumers.

SunCulture created a solar-powered irrigation system designed to give farmers consistent access to water and energy. These systems can increase incomes by 5 times and improve resilience to, and recovery from, climate shocks, such as droughts, by 25-40%. This consistency spurs income generation and helps to close the yield gap, as African smallholder farmers yield 50% less than the global average.

However, the uptake of the irrigation systems is limited by high upfront costs, a challenge faced by many climate tech companies in emerging markets. SunCulture, in collaboration with SF and British International Investment (BII), is piloting a carbon credit proof of concept to address the affordability issue. SF and BII are financing SunCulture to harness the future worth of carbon credits to lower the cost of its products for farmers. SunCulture will be paid back for its financing through future carbon credits.

Financial flexibility is crucial for the providers of clean energy as well as the customers. CavEx, a cloud-based digital marketplace, has built climate into its model to close the gap between the ability to purchase clean energy and demand. CavEx tracks and monitors climate-positive actions and will allow those who engage in them to trade in carbon credit training and climate financing. The platform uses principles of accessibility and transparency to connect planet-friendly projects with carbon credit buyers. Through its model, small entrepreneurs, who would traditionally be left out of financing opportunities, can generate income for trading through practices that benefit the climate.

When it comes to scaling access to clean energy, investors can increase the impact of their investment by working with partners across the field. In emerging markets, the pipeline of potential collaborators is vast, and successful collaborations will stand to gain in terms of impact and efficiency through access to local knowledge and early-stage innovators. 

Small Industries Development Bank of India (SIDBI) promotes small and medium-sized enterprises in the manufacturing and service sectors. SIDBI has a climate throughline that underscores its investment and includes promoting responsible business practices and sustainable financing. Their investments have a foundational goal of scaling climate investment into multiple outputs.

Shell Foundation partnered with SIDBI this year to address the electric transition of two- and three-wheeler vehicles through a highly innovative facility that provides a partial credit guarantee – up to 7.5 % of the second loss layer –  for businesses using electric two- and three-wheeler vehicles.

By combining capital, SF and SIDBI can de-risk local lending for lower-emitting transportation and enable more maturation in the market for these types of loans. The facility will scale access to electric vehicles for 50,000 urban transporters and empower them to increase their incomes by up to 70%.

Shell Foundation’s partnerships with S4S and SunCulture also underscore the success – and necessity – of these innovation partnerships. S4S was recently recognised by the EarthShot prize for its solar food dehydration technology. The SunCulture carbon credit pilot will increase the addressable market for solar irrigation pumps, which the company might otherwise struggle to achieve through traditional finance structures.

The S4S and SunCulture solutions are supported through our strategic partnerships with the UK’s Foreign, Commonwealth and Development Office (FCDO), and the British International Investment (BII).

These partnerships, as well as SF’s recently expanded MOU with the US International Development Finance Corporation (DFC), demonstrate the ability of philanthropic and development finance capital to work effectively together, leveraging Shell Foundation’s risk-tolerant capital and on-the-ground market knowledge to enable successful and earlier deployment of capital into high-impact businesses.

COP28 has highlighted that to make strides in decarbonisation and equitable clean energy access, organisations must break traditional silos and come together in coalition. The time is right for investment and collaboration in innovation in the Global South.