Design Expo 2014: Online Discussion - Access to Energy

Agreeing with Vincenzo and building off those points: focus on access to energy in schools and households will drive positive impacts for women and children.

Governments have a role to play in setting a stable policy and taxation environment. The recent change to VAT in Kenya (solar was tax exempt, then the government lifted the exemption and then reinstated it) creates frustration and confusion for businesses and customers.

There is also a strong need for governments to enable and support the growth of the mini-grid sector, by allowing for cost reflective tariffs and allowing the private sector to distribute energy.

There are some schemes around solar in India, however, a lot needs to be improved still around the product selection process.

The government should produce a good policy document on alternate energy which will bring in investors for the production of alternate energy products e. g solar products. Once there is competition and level playing ground, the prices will reduce and affordable to women. It will also reduce unemployment( more jobs will be created) and poverty level among women and youths.

yes, at least in East Africa, for example kenya introduced VAT and importation taxes on solar last September and re-introduce the exemption for solar water heater and solar lamp this may

Kenya, Uganda and Tanzania have more accommodating policies and VAT exemptions. Tanzania also has a subsidy programme for rural connections.

I agree with Davinia. Also, instability in terms of laws and regulations is a big problem for solution (like mini-grid) that require high investment and long pay-off.

How much impact does this VAT policy instability have on the ability of private firms selling solar lights to plan for the future?

Exactly. If the investment horizon is 5 - 10 years and your financial model inputs are changing every couple of months, you're going to have issues raising capital and modeling cash flow.

Unfortunately, too often governments are more interested in large foreign investments than in distributed solutions, an example is the energy policy proposed by the Kenyan government (1 chapter about nuclear energy and just 2 words about solar lanterns...in a country with unreliable distribution network and majority of the population living in rural areas off-grid).

Well, that risk is typically absorbed by the user and in Kenya we saw many companies had a reduction in sales when VAT was reintroduced. The drop in sales then creates issues for modeling and capital raising purposes, among others.

Solar lamps are becoming every day cheaper and more reliable while the price of kerosene increase. So, there is a growing demand for this products and more companies are likely to enter in the market. At the same time customers of solar lights are very price sensitive (low income) so a 16% raise can really have an impact on the sales.

for PAYG the problem is even bigger because the company is supposed to pay VAT the day the sale is done on the full value of the product...

For the most part, when it comes to governments and policy-makers, simply stepping out of the way can have a positive impact, more so than proactive policy making. It's important to be realistic about the context and by reducing red tape we can allow users to make their own decisions, rather than be distorted by government agendas.

That brings us to the end of this live session. We will leave this discussion open, so please do continue to post your comments!

Thanks to our panel, and all of you who joined us today!

Be sure to check out the Access to Energy articles and products in the Design Expo: http://designexpo.businessfightspoverty.org/