Expert meeting The role of energy in income generation in small scale enterprises 13 February 2008, SDC Delhi

Transcription

1 Expert meeting The role of energy in income generation in small scale enterprises 13 February 2008, SDC Delhi Annemarije Kooijman Empirical evidence on energy for income generation in rural areas Technology and Sustainable Development (TSD) Center for Clean Technology and the Environment, University of Twente, The Netherlands

2 Research Topic The power to produce: Energy choices and the role of energy in poverty reduction through small scale enterprises. Case studies in rural hill areas of Himachal Pradesh, Uttarakhand and West Bengal 2

3 Energy technology Energy service Fuel, Energy using appliance Finance, skills, access, infrastructure, health Energy use in enterprises Energy use in households Energy use in services Increased income generating opportunities Increased wellbeing, health, spare time Improved health services, education, Livelihoods 3

4 The livelihoods framework Enterprise assets Human Access OBJECTIVES Financial Natural Social Physical Modern energy services as a strategy? RESULTS of uptake 4

5 Research questions What are the effects of the uptake of modern energy in small scale enterprises in rural areas on poverty reduction? Energy : uses in small enterprises in rural areas- and why? Energy choices Enterprise : changes in enterprises New products or services Improved quality of products or services Changes in production process Does this lead to new small enterprises, improved income for entrepreneur, or enterprise growth? Poverty : changes in livelihoods Income, comfort, other changes 5

6 Research design Himachal 6 clusters of villages ;120 enterprises Uttarakhand 5 clusters of villages; 70 enterprises Darjeeling 3 clusters of villages, 2 estates; 70 enterprises Electricity is available (choices) Enterprises in common sectors Qualitative data Remote clusters of villages and clusters close to towns or through roads Analysis per appliance per sector 6

7 pictures 7

8 Findings: non-farm income generation In village clusters 4-14% of households are involved in local non-farm income generation Financial starting position Poor <2500 Rs per month, Well off >5000 Rs per month Enterprise categories. Sample added DME near but not in clusters poor medium well off casual OAE NDE DME SHG 8

9 Findings: modern energy uses Electric light for enterprise: 80% Electric appliances for enterprise service or product: 57% Heating in sample 50 enterprises, combined fuel use: LPG 40%, kerosene 18%, charcoal 10%, coal 22%, wood 34% 9

10 Who benefits from electricity? (1) Light: the least demanding and most common energy service Electricity for light: 100% of well-off, 84% of medium, 66% of poor No connection, or connection but no use for enterprise (weaving at home, carpenters with no fixed shop) 0% of wealthy, 13% of medium, 30% of poor No connection but other light (blacksmith, chai: poor) 0% of wealthy, 3% of medium, 4% of poor Data HPD 10

11 Who benefits from electricity? (2) Other electric appliances for enterprise 83% of well-off entrepreneurs, 60% of medium, 35% of poor. HPD 11

12 Types of benefits Efficiency- increased volume of production, reduced cost or reduced number of active work hours New or improved products or servicesdoes not imply growth objective Reduced drudgery Comfort or entertainment 12

13 Actual impact per energy service Electric lighting: main impact: saving on kerosene cost. Longer working hours in season for tailors, daytime light for few tailors and electric repairs. Electric sewing: use both electric and pedal/manual in same shop, production per person similar to pedal machine, higher production in season. Carpentry: increased efficiency and turnover Welding: new service 13

14 Impacts of lighting 53% use energy for lighting, 47% do not use energy for lighting in enterprise. Uses of light related to working hours long working hours peak season only evening flexibility winter 14

15 Potential benefits of modern energy appliances Improved enterprise operation New or improved product or service quality Reduced cost for same service Comfort or entertainment excl light 49% 27% 14% 10% HP analysis 15

16 Motivation for investment in energy appliance For appliances using electricity that CAN lead to improved enterprise operation- increased production volume was a motivation for investment in 29% of choices Electricity provides new or improved product - income 55% of choices. 76% of entrepreneurs state no interest or hope in future growth 16

17 Opportunities to improve uptake and benefits Education/training? Loans? Access to markets? 17

18 pictures 18

19 Tailors Findings: skills and education investment income Yes, related to social group No, related to market size Welders Carpenters Fruit processing and weaving Yes, both formal and informal training and exposure Yes, in combination with financial starting position Yes, only highest education level for computers and high quality Especially formal or high level informal training Yes, only for high investment machines Yes for all, most for highest education in comb with 19 market networks

20 Findings: loans Loans: largest enterprises in sample have taken loans (DME), smallest enterprises do not invest but inherit, or invest from savings or from borrowing from friends or family. Attitude towards loans is negative: do not want loan because will not be able to pay back. 20

21 Findings: markets Role of energy in enterprises depends on - Local markets: size, level of wealth and nonsubsistence expenditures - For many products with local markets WILLINGNESS TO PAY FOR QUALITY OR EFFICIENCY IS LOW (eg tailoring. Exception: carpentry). - Access to distant markets, tourism, more wealthy customers passing through (eg. highway location) - Competition often decreases economic benefits 21

22 Markets! Local markets only- opportunities for growth limited, depends on wealth of local market Access to distant market- by those with better financial starting position, rare exceptions with good contacts with markets 22

23 Findings choices and impacts Impacts of modern energy uptake on enterprise: for most : comfort / luxury (for enterprise or customer) for some: increased business opportunities for entrepreneur (product quality, reliability) for others: reduced operation cost (availability of wood, availability of kerosene) but also: risk for entrepreneurs if repayment of loans or fixed energy payments are a burden Conditions: access to loans or training is not sufficient if no sustainable access to markets- especially nonlocal markets 23

24 Summary Energy: uptake, uses AND impacts depend on opportunities for improving products or services. Education: practical skills and marketing Markets: sustainable access is needed 24

25 Extending results Currently non-electrified areas in plains, dalit bastis, smaller villages Implication for electrification: comfort only in non-roadhead locations? Implication for project design: is it possible to increase non-farm income generation opportunities to above 4-14% of hh, in combination with long term access to distant markets? 25

26 Discussion your experience on energy impacts on small scale enterprises in other areas in India feedback and inputs for ongoing research, especially institutional context topics and opportunities for follow-up action research stakeholders who should be targeted for awareness of issues raised, and channels to reach them 26

27 Thank you! 27