Financing communal bioenergy production and use in poor rural areas

The International Energy Agency estimates that over 1.3 billion people do not have adequate access to modern energy services (IEA, 2011), a condition that is often referred to as energy poverty in the public discourse. The implications of energy poverty for those afflicted by it are severe. Not only does inadequate access to energy impede economic development, it is also the leading cause of indoor air pollution in developing countries; a problem that is estimated to kill more than two million people every year. There is little doubt that increasing the access of the world’s poor to modern energy services would make a massive difference for the better in the fight against poverty.
The challenge is vast. Massive investments are required to successfully tackle this problem. Grids need to be built, generators need to be set up and modern fuels need to be made available at rates that are affordable to the poor, and not just in one community, but in hundreds of thousands, all over the world. The sheer scope of the challenge means that any viable long term solution to this problem must inevitably be based on commercial principles.
The principle objective of this study is to explore the feasibility of financing communal bioenergy production and use in impoverished rural areas. While bioenergy has been identified as having a lot of potential as far as mitigating energy poverty goes, which is mainly due to the fact that it can be produced and used on a local scale in a sustainable manner and is suitable for off-grid electricity generation, not a lot is known about the feasibility of financing communal bioenergy production and use, or put differently – can the capital invested in a communal bioenergy project be recuperated by the investor?
This study attempts to provide an answer to this question by looking at the financial viability of four bioenergy production and use models in impoverished rural areas. The discussion begins with an overview of these four bioenergy production and use models, and subsequently moves on to look at the challenges of financing communal bioenergy production and use in poor rural areas. Thereafter, an overview of the solutions with which these challenges could potentially be addressed is provided. In the concluding section, the discussion draws on the analysis of the preceding sections to provide an assessment of the feasibility of financing communal bioenergy production and use with reference to the bioenergy production and use models that were discussed in section two.