Description of the sector/context and its distinctive elements
- This sector is a combination of the agriculture and energy sectors. It requires understanding the dynamics of both agriculture market systems and energy market systems. Often projects will approach this nexus from one perspective or the other:
- Energy projects that are looking for productive uses of energy (to generate sufficient demand to pay for the cost of the energy) will come across agriculture as one such productive use. A critical factor in determining how valuable agriculture can be as a source of revenue for energy providers, will be the performance of the agricultural market system.
- Agriculture projects that are looking for ways to increase productivity or value addition at particular stages in the production process (i.e. irrigation, harvesting, processing, or transportation) may seek energy-intensive solutions. The viability of these may depend on the performance of the energy market system.
- It is important to go slow, and use systemic thinking to fully map out each system independently before diving into the overlaps and intersections. Biogas projects in particular can be seen from either perspective – energy driven or agriculture driven, with two different product lines: gas for household cooking and bio-slurry for fertiliser.
Key adaptations to PMSD use cases
- Market Analysis / Market Mapping: Conducting two separate market analyses and then connecting them afterwards. Using market mapping to understand where in the agricultural market system improved access to energy can unblock constraints especially for marginalised actors
- Market Analysis / Economic Analysis: Understanding the full lifecycle costs for new capital expenditures in energy – appropriately forecasting the operations and maintenance costs, and building in enough risk/contingency into the model so that over the long run farmers are able to pay for enough energy (at the right fee/tariff). Understanding the ability of different actors to invest in energy improvements.
- Facilitating Interventions: Negotiating investment in large capital projects with an appropriate share of the costs, and affordable fees. Demonstrating the business case to private and public investors. Influencing the provision of subsidies (which will be necessary for many capital intensive projects) so that they are designed ‘smartly’ and stimulate markets rather than undermine them. Improving the participation of marginalised groups in planning so that new technologies introduced respond to their needs and realities
Links to case studies: Solar-powered irrigation for vegetable growing in Nepal