South Pole And Oorja To Use New D-RECs For India’s Diesel Problem

The D-REC Initiative, a new not-for-profit platform to deliver internationally recognised guarantees of origin from distributed renewable energy, has announced that its new market mechanism and technology has been adopted by farming-as-a-service company, Oorja Development Solutions, and climate advisory and finance business, South Pole, to support last-mile communities in India transition to renewable energy.

Approximately 30 million Indian farmers rely on operationally expensive diesel pumps for irrigation, trapping them in a cycle of energy poverty and hindering the renewable energy transition. Oorja addresses this issue by financing and installing decentralised solar energy systems at the farm level.

But, in spite of the multi-layered benefits that such small-scale solar devices enable, they often lack the means to attract impact finance which could advance such solutions. The new Distributed Renewable Energy Certificates (D-RECs) offer a bridge for corporate sustainable finance from multinationals to reach the distributed renewable energy sector in these emerging markets.

Lack of access to reliable and affordable energy services stifles farmers’ productivity and income. Fuel costs for diesel pumps alone account for 20-40% of the total production cost. This high price, combined with limited water accessibility due to the effects of climate change, forces farmers to under-irrigate which results in crop yields 50% lower than their potential.

While agricultural work is a way of life and a long family tradition, diesel pumps actually harm farmers’ livelihoods. The price of diesel fuel prevents year-round access to irrigation, resulting in farmers missing out on cultivating high-value crops and interseason cropping. Relying on diesel pumps is also inconvenient, and hazardous, often involving transporting heavy diesel machinery many kilometres to the field

The global fight against climate change is also hindered by diesel pumps. 12% of India’s total annual diesel consumption comes from diesel pump sets, and diesel irrigation alone accounts for 32 million tons of CO2 emissions per year, according to a 2018 report by the Institute for Energy Economics and Financial Analysis (IEEFA). It is therefore vital that last-mile communities in India transition to using affordable solar pumps and receive impact finance through instruments like D-RECs.

Through the D-REC partnership, South Pole supports Oorja to certify and commercialise the renewable energy generated by Oorja’s solar assets, using the D-REC platform. This unlocks a new revenue stream that helps financing and thus accelerating the deployment of solar irrigation pumps. This form of impact finance comes from multinational companies seeking to use RECs to reduce their Scope 2 footprint. D-RECs provide transparency in companies’ efforts to meet ESG standards by ensuring the purchased energy is being produced in a specific area, while simultaneously driving investment into these emerging markets in India.

Gian Autenrieth, Co-Lead of the D-REC Initiative, said: “We are proud to work alongside Oorja Development Solutions to support clean energy to remote farming communities in India. An increased focus on ESG principles has driven business leaders to seek renewable energy procurement strategies that actually support the development of new installations in disadvantaged regions, improving the presence and affordability of clean energy in these emerging markets. The D-REC platform provides the needed transparency for corporate buyers while also improving the livelihood of India’s smallholder farmers, thus making swift progress in our goal to drive the global energy transition forward”.

Dr Clementine Chambon, CTO and Co-founder at Oorja Development Solutions, said: “Oorja has partnered with South Pole to certify the clean energy generated from our solar pumps using the D-REC platform. This partnership will greatly expand our reach in India, as the additional funds generated from businesses buying the renewable energy certificates generated by our pumps will be used to fund additional projects in the country. This new revenue unlocked through the use of D-RECs will help farming communities phase out the use of diesel fuel as our solar services become more localised, reliable, and affordable”.