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Green energy in agricultural value chains

Dossier: Green energy

Most ACP countries have year-round sunshine and could benefit greatly from solar photovoltaic installations and other sustainable energy technologies

© Jeffery M Walcott / IWMI

Dossier: Green energy

A transition to sustainable energy can impact agricultural businesses at all stages of the value chain. By introducing renewables, businesses can mitigate greenhouse gas emissions, adapt to the effects of climate change and reap the economic benefits.

African, Caribbean and Pacific (ACP) countries are on the front lines of coping with the challenges of population growth and climate change. Food and economic security are critically threatened by rising temperatures, yet agricultural value chains that rely on fossil fuels also contribute extensively to greenhouse gas (GHG) emissions. Renewable energy can mitigate GHGs, improve the economic efficiency of the value chain and help adapt to a changing climate.

The small island developing states (SIDS) of the Caribbean and Pacific, in particular, depend on imported fossil fuels for energy. Electricity prices in these regions remain some of the highest in the world, due to the lack of economies of scale and high transportation costs, and this can be particularly burdensome for farmers. Most SIDS countries – with some notable exceptions, such as Papua New Guinea and the Solomon Islands – have high levels of grid access, but exorbitant electricity costs prohibit business expansion for many farmers. Most ACP countries have abundant year-round sunshine and are positioned to benefit greatly from solar photovoltaic installations and other sustainable energy technologies. However, in some parts of Africa, remote rural regions lack dependable grid access, which presents additional challenges for agricultural businesses.

Co-benefits of renewables

Post-harvest losses due to a lack of refrigeration throughout the supply chain present a significant challenge to agricultural efficiency in many developing nations. In Nigeria, for instance, 45% of post-harvest output spoils due to a lack of access to cold storage, resulting in a 25% loss of income for the country’s 93 million small farmers.

Nigerian company ColdHubs is tackling this issue with renewable energy. CEO Nnaemeka Ikegwuonu emphasises the need for green infrastructure in rural areas, saying, “For production, we need energy, for processing, we need energy to create products, and for marketing and distribution we need energy to run the digital tools and transportation methods we rely on. For all parts of the value chain, green energy is essential.” The company’s cold storage rooms are powered by 5.5 kW of rooftop solar panels connected to a battery system, and farmers use these facilities to preserve their produce at a rate of €0.45 per crate. This is a cost-efficient method of approaching missing links in the supply chain that creates added value for the local economy with environmental co-benefits. (See Spore interview with Nnaemeka Ikegwuonu for more information).

Energy-intensive agriculture

While subsistence farmers may lose out due to a lack of electricity access, those in energy-intensive sectors may feel pressure from expensive electricity. For example, intensive livestock farming demands a high level of energy consumption for feed, ventilation, environmental control, transportation and processing. In Jamaica, the government recognises the need for sustainable energy to reduce costs and mitigate GHG emissions. Politicians have set a national target for 50% renewable energy use by 2030 and have adopted policies to make investments in alternative energy sources more affordable to small farmers.

Through these efforts, legislation for net electricity billing has been introduced through an agreement between the national utility, the government and the Office of Utilities Regulation. This scheme allows farmers to remain connected to the grid, selling any surplus electricity generated from renewable power back to the utility company at the wholesale price. This means that farmers can depend on the grid for backup to smooth out the intermittency of renewables and avoid having to purchase expensive energy storage.

The proliferation of renewables in Jamaica has also been advanced through improved access to financial capital for investment in renewable energy. The Development Bank of Jamaica (DBJ) is a national government entity that, since 2008, and in partnership with the World Bank, has operated a special facility to allow businesses to access €20 million in loans for energy efficiency and renewable energy projects. The facility provides these loans at a competitive rate and allows farmers to use agricultural equipment as collateral, instead of the land itself, which reduces risk and makes the funds more accessible.

These changes in national policy have improved economic opportunities for Jamaican farmers. Among the beneficiaries are the poultry farmers that supply chickens to the Jamaica Broilers Group (JBG), which has led a rollout of solar and efficient LED lighting, in part through taking advantage of DBJ loans. For farmers, such as Shelly-Ann Dinnall who raises 600,000 chickens each year, energy costs frequently account for 60% of business expenses. However, through the savings generated from using the JBG’s grid-connected solar arrays, businesses save money to allow for other business investments, creating jobs and stimulating the regional economy.

Alternative markets for agricultural products

For some SIDS farmers looking to reduce energy costs, the use of coconut oil for biofuel can offer substantial environmental and economic benefits. In the Pacific Islands, processing coconut oil for use as a diesel replacement contributes to greater local economic security – as it can help to reduce the impact of volatility in crop export prices that vary widely due to fluctuations in international harvests. The oil extracted from dried coconut kernel, or copra, can be used as a biofuel alone in modified engines or blended with diesel fuel. The copra ‘cake’ that remains after oil extraction is ideal for use as livestock feed, which offers a further positive contribution to sustainable agriculture. In islands such as Fiji and Mauritius, sugar cane is also used extensively for biofuel.

The Nikua Training Center in Fiji is an NGO that builds copra drying towers to act as ‘profit-centres’ for village enterprises by providing new revenue streams. The towers are vertically-integrated production units that process raw copra in situ into an oil form, for local use or for export.

“Each tower establishes the weekly production of 780 kg clean food-grade copra in Vanua Levu, Fiji, with clusters of 5-10 towers served by an on-site, electric generator running on biofuel. Each cluster is modular in its design, allowing quick, efficient, and low impact transport and set-up of operations close to the coconut source,” states Nikua CEO, Daniel Shafer. He continues to highlight the project benefits, “such as direct sales of coconut oil, biofuel production capacity, improved livestock production by utilising the coconut meal by-product, and carbon sequestration by producing biochar [charcoal added to improve soil fertility].” In early 2019, Nikua also launched the Biofuel Field Engineering Laboratory at the University of the South Pacific, which provides training for technicians working on biodiesel units in isolated communities.

Biofuel for diesel replacement has been trialled across the Pacific, including feasibility studies in Samoa, the Solomon Islands and Vanuatu. These studies conclude that coconut biofuel is technically and economically feasible, but there remains limited implementation at a commercial level and extant employment is small-scale. This indicates a largely untapped market in Pacific nations that could be deployed with improved public policy and financial mechanisms to overcome the high initial investments needed for processing plants.

An economic argument for clean energy

Investing in efficient, renewable energy systems is key to ensuring food security and economic development, while minimising the adverse effects of conventional, fossil fuel-based agricultural value chains. Imported fuel sources are unusually expensive and extreme weather events can cripple large segments of an entire nation if its infrastructure and value chains are based on imported fuel sources. The development of favourable policies, as well as support for private sector innovation, are both necessary for the expansion of renewables and can provide opportunities for developing empowered, independent and self-sustaining local economies.