Getting paid to produce electricity for the government!

Am at the Development Dialogue 2010, an annual gathering at the impressive Deshpande Center for Social Entrepreneurship in Hubli, North Karnataka. This is designed as an intersection of social initiatives being funded by the foundation and several international social entrepreneurs, consultants, business leaders all coming together for a few days each January to work through the key issues concerning the sustainable scale and growth of socially relevant initiatives.

Amongst all the discussions, the one that stands out is the Micro-Hydro community based electricity production in Indonesia. Tri Mumpuni, an Ashoka Fellow and well known activist in the subject of sustainable electrification of rural communities shared the model she and her team have evolved in Indonesia.

The challenge? Over 105 million people in Indonesia still live without electricity. The government has tried large hydro plants - but it violates human rights and often irreversibly damages the ecology. Several small initiatives have tried local micro-hydro plants - but these are not sustainable. As soon as subsidized state run power comes in, these small community initiatives fizzle out. The problem still remains - because state run electricity, supplied off a central grid has its own challenges of sustainability, especially in remote, rural areas.

The People Centered Economic and Business Institute, partnering with local communities has created a series of micro-hydro solutions. And they found a way to succeed! The trick is:

- Build the capability and skills within the community to run and manage the micro-hydro plant, including the technical details of running the plant. If the community is unwilling to learn and take ownership - Mumpuni and her team just don't take it on.

- And - more importantly - build an agreement with the central state grid to buy the excess power generated from these small installations!

And by implementing a connection between the off-grid local system and the central grid, the provision of rural micro-hydropower (MHP) plants has now become an economic investment activity!!.

Through cooperative dialogue the community decides how to leverage the income it is generating - Voila! And now the income from these micro-hydro plants is enabling better health, more education and sustainability of the communities. And it chooses to continue using the local off-grid system long term, instead of completely shifting to the central grid.

The by product of this approach is also the protection of the environment - its become critical to ensure trees are protected, water is saved and harvested, catchment areas are kept healthy - because it is all now an economic investment and is helping the community build and grow.

What started initially as a government approval only for IBEKA facilitated MHPs, Tri Mumpuni and her allies got the government to agree in 2002 to buy all small scale power generated from such off-grid systems in Indonesia. It probably required tons of lobbying over several years - but the impact today is a highly sustainable model that connects local, off-grid electricity production to economic opportunity in an ecologically responsible manner.

The United Nations Economic Commission for Asia and the Pacific (UNESCAP) adopted this as a Public Private Partnership model in the Asia Pacific region. The People Centered Economic and Business Institute is now taking its extensive learning from Indonesia and in partnership with organizations across other countries is advocating the need for good governance to build sustainable models through the Electricity Governance Initiative.