The Clean Energy and Agriculture Nexus is a critical relationship that can be harnessed to maximize developmental impacts in rural areas. Agriculture is the main means of livelihood for 2.5 billion people worldwide, primarily in developing countries, where approximately 45 percent of the population relies on agriculture as a chief source of income. A strong agriculture sector is crucial for economic development, accounting for as much as 30 percent of developing countries’ gross domestic product. Increased agricultural productivity is a key driver of food security, income generation, and improved quality of life in rural areas.
To achieve increased agricultural productivity, access to increasing amounts of energy is required. Food production accounts for 30 percent of global energy consumption, and energy use will continue to grow as the world’s population rises. The Food and Agriculture Organization of the United Nations predicts that between 2006 and 2050, food production will need to increase by 170 percent to accommodate a 130 percent rise in global population. Clean energy services offer a sustainable alternative to meeting agricultural demand, enabling farmers to mechanize operations, process raw products to add value to commodities, and extend the shelf life of produce through refrigerated storage.
The relationship between clean energy and agriculture is a virtuous cycle that can be harnessed to maximize developmental impacts in rural areas. The cycle begins by providing poor, rural families access to cleaner, more affordable energy, which can improve community health and provide more opportunities to earn income. Farmers can both diversify and increase agricultural production using affordable energy. With increased income, households and communities can purchase more energy, enabling new or improved energy products and services that can create more opportunities to enhance livelihoods and strengthen the energy-agriculture cycle.
Micro-grids can play a crucial role in powering agricultural loads, providing higher peak power for longer periods and allowing for the use of a wider range of productive commercial equipment. Micro-grids can produce both single-phase and three-phase electricity, making them attractive to both rural entrepreneurs and off-grid households. Agricultural loads can also improve the economic viability of micro-grids by providing daytime loads that match the energy generated during the day. This can make energy costs competitive with those of solar home systems or grid extension.
Several clean energy sources can power micro-grids, each with different fuel and operating costs. Solar power, small-scale wind power, biomass, biogas, and small-scale hydro are some of the common clean energy sources used to power micro-grids. The estimated levelized cost of electricity (LCOE) for these sources ranges from $0.10 to $0.87 per kilowatt-hour (kWh) based on research from the International Finance Corporation (IFC) and the University of Cambridge. While the LCOEs for micro-grids may appear high when compared to retail electricity tariffs, they compare favorably when factoring in the costs of grid extension. A 2018 Bloomberg New Energy Finance (BNEF) analysis found that in the case of rural consumers with low to moderate energy demand, micro-grids may often be less expensive than both grid extension and solar home systems, and by 2030 micro-grid energy costs are expected to always be more affordable than those for stand-alone diesel generators.