06/06/2012 12:28 pm ET | Updated Aug 06, 2012

How Renewable Energy Solutions Reduce Poverty Around the World

Renewable energy solutions are not only good for the environment. If done well, they can pay for themselves and reduce poverty around the world. This is the message of the 2012 Ashden Awards, which just recognized inspiring renewable energy programs from Afghanistan, Cambodia, East Africa, India and Indonesia.

Since the turn of the century, the Shri Kshetra Dharmasthala Rural Development Project (SKDRDP) has extended micro-credits for renewable energy projects for a total of $3.2 million to poor farmers in the South Indian state of Karnataka. The credits paid for the installation of almost 20,000 biogas plants, solar home systems, improved cooking stoves and family-size pico-hydropower plants.

The installations cost between $280 and $400 each and power electric lights, small appliances, cell phone chargers and (in the case of the biogas digesters) kitchen stoves. They extend the hours during which poor families can work and study, liberate women and girls (typically) from collecting fire wood for hours every day, and reduce the pressure on local ecosystems. They also protect families from the polluting effects of open fires and kerosene lamps, which kill more people than malaria or tuberculosis every year.

The installations of SKDRDP rely on technologies that have been developed and tested over many years. The Project's pioneering role is in making these technologies available to some of the poorest people on a self-sustaining basis. The organization works through a network of 169,000 local self-help groups which involve close to one fifth of all rural families in Karnataka. Seventy percent of the groups' members have incomes of less than two dollars per day. These people typically cannot open bank accounts or take up loans from commercial banks. The self-help groups help them prepare long-term financial plans, and provide small micro-credits for a wide range of purposes.

The members of the SKDRDP groups repay the loans for renewable energy projects in 150 installments of approximately three dollars per week. This is less than what poor families typically spend on kerosene and firewood every week. The program is thus financially self-sustaining and can be scaled up to reach much larger population groups. SKDRDP estimates that within the coming year, 70,000 additional self-help groups will qualify for taking up micro-credits for energy projects.

On May 30, the Shri Kshetra Dharmasthala Rural Development Project was honored with the prestigious 2012 Ashden Award in London. Other recipients of the prize included a social enterprise that sells simple solar lanterns and lighting kits in Africa and other parts of the world; programs promoting small, off-grid hydropower schemes in rural Afghanistan and Indonesia; and a social enterprise that sells simple ceramic water filters that allow people in Cambodia to access clean water without cutting down trees to boil it. All these projects show that with innovative, locally adapted approaches, modern energy services can be provided to the rural poor without damaging local ecosystems and the climate.

At the awards ceremony, Kandeh Yumkella, the chair of the UN's Advisory Group on Energy and Climate Change, urged governments around the world to increase their support for clean energy pioneers. "The Ashden 2012 winners," Yumkella said, "expose the myth that poor countries cannot stimulate growth without degrading the environment. They demonstrate that sustainable energy stimulates green growth and new jobs, lifts people out of poverty, improves health and opens up new educational opportunities."

The World Bank, governments and private investors feel more comfortable putting millions of dollars into large projects and conventional technologies than dealing with the innovative approaches of grassroots institutions. Yet as International Rivers showed in a recent report, decentralized, bottom-up approaches are more effective at meeting the needs of the poor and protecting the environment than the large infrastructure projects of the past. The projects that have just been recognized by the Ashden Awards provide powerful evidence for the exciting potential of small but innovative renewable energy solutions.