event 07 янв. 2020

Nexus Regional Dialogue MENA // Benefits, Risks, Policy Options and Innovative Financing Models of SPIS

More than 40 experts from Egypt, Tunisia, Jordan, Sudan and Yemen convened on the 8th and 9th December in Cairo for the regional dialogue “Solar Powered Irrigation Systems in the Arab Region: Benefits, Risks and Policy Options”, organized by the Nexus Regional Dialogue (NRD)- MENA, FAO, the Arab Organization for Agricultural Development (AOAD) and the League of Arab States (LAS).

category Nexus Blog tag Food tag Solar-powered Irrigation Systems (SPIS) globe Ближний Восток и Северная Африка
Regional dialogue mena

The experts debated and formulated recommendations on SPIS in the Arab region by discussing inter alia the following questions:

  1. What are the real risks and benefits of SPIS in the region?
  2. What are the current policies, laws, regulations and subsidy systems for SPIS, their impacts, bottlenecks and needed amendments to manage the risks and realize the potential of SPIS?
  3. How to best harness the potential of solar irrigation to improve livelihoods of farmers and improve WEF security?
  4. How can the risk of groundwater depletion be addressed effectively?
  5. What types of capacity development programs are needed to support farmers, empower women and promote gender equity?

Solar Powered Irrigation Systems (SPIS) represent one of the fastest growing applications throughout the Arab region. This is mainly due to the radical phase-out of power and diesel subsidies, the decreasing costs of PV systems across the region and the governmental subsidies of SPIS in some countries. They can mitigate climate change impacts when used to replace diesel pumping. Consequently, the production and sales of these new energy efficient pumps have proliferated throughout the region and are generally considered a sustainable green business. However, the increased use of solar pumps might encourage greater water extraction and therefore lead to the over-exploitation of land and water resources. This poses a significant challenge to find ways to monitor and regulate water extraction by solar pumping, through integrating SPIS into a broader Water-Energy- Food Nexus approach.

In this regard, FAO-RNE, the LAS, the AOAD and the NRD- MENA conducted recently a project on SPIS in the Arab region, whicht resulted in two training workshops in Tunisia and Egypt, two policy documents on SPIS in Tunisia and Egypt and a regional report on SPIS in the Arab region. This two-day workshop marks the end of the successful project. More than 40 representatives of governmental entities from the water, energy and agriculture sectors met with actors from civil society, International and regional organizations and academia, coming from Egypt, Tunisia, Sudan, Jordan and Yemen.

The first day was devoted to comparative analysis of SPIS policies of some Arab countries, e.g. Egypt, Tunisia and Morocco as well as case studies with insights from, for example, India, Nepal and Ethiopia. The day ended up with lessons learnt from various regions. The second day was dedicated to open discussions on challenges and opportunities of technology transfer to farmers and capacity development programs needed to support farmers, empower women and promote gender equity. Moreover, interactive discussions were held on potentials of solar irrigation to improve livelihoods of farmers and on options for addressing the risk of groundwater depletion.

Main results of the dialogue

The dialogue resulted in identifying the main challenges and opportunities of mainstreaming SPIS in the region with recommendations on maximizing the socio-economic impacts for farmers:

  1. Introduction of electronic monitoring systems in combination with SPIS (connected via Internet of things (IoT)) that control water abstraction: Such a system would e.g. reduce the problem of over-abstraction of water resources by the transmission of data on the water qunatity pumped to the responsible administration.
    This can help controlling the extraction rates from aquifers. One challenge would be to find control mechanisms that farmers would agree upon, especially when meters are being installed on privately owned wells. Moreover, data transmission is not legally possible in all countries.
  2. Collective use of SPIS: Irrigation organizations can be very beneficial in schemes in which farmers do not own individual pumps but are rather part of a group or association that shares SPIS. In order to promote shared/ collective SPIS systems, it is important to set an innovative financial mechanism to form partnerships with the private sector (financiers, suppliers and service providers, water user associations and water authorities). This partnership would allow to not only support the financing of collective SPIS but also with monitoring of water abstraction.
  3. National coherence and coordination across all sectors: Coherence can assist in balancing competing demands for water among various sectors and users. Coherence between all sectors can be facilitated by defining roles, both horizontally and vertically. Duties and obligations must be clearly explained for all actors, ranging from policymakers, planners and service providers to regulators and oversight bodies. This must be balanced against the risk of working in insolation from others, in so-called silos. A participatory approach that engages stakeholders at all scales would help break silos, ensure coherence and inclusivity, and allow for the sustainability of measures taken through improved buy-in.
  4. A certification scheme of suppliers as a first step to create confidence and trust and to reject non-qualified suppliers: Tunisia presents a success story in this area. The Tunisian Energy Agency (ANME) awarded an agreement/certification to companies looking for becoming solar systems installers. Among the requirements to have this agreement are proven competence of the staff in the field of solar energy and having a specific training as solar systems installer. The installation company must be approved by ANME. Approved companies install all PV and SPIS systems, both on- and off-grid.
  5. Reconsidering subsidies for other energy sources for agriculture: Other energy sources for agriculture – including electricity – are often subsidized, making investments in solar energy less attractive. To effectively promote SPIS in turn, subsidies on e.g. electricity for water pumping should be avoided.

The dialogue was followed by another regional dialogue on the 10th of December on innovative financial models of SPIS in the region. Some of the recommendations included in this discussion were:

  1. Establishing state-affiliated funds for renewable energy: A state-affiliated funds can help farmers getting needed SPIS without the burden of interest. .

  2. Develop documented and ready-made feasibility studies: Feasibility studies could be submitted to banks for different scenarios, and the farmers may use these packages to apply for funds. This will play an important role in bridging the gap between banks and farmers.

  3. Raise awareness on climate financing (climate funds and funding agencies):The Green Climate Fund is one of the important potential sources of financing, especially since SPIS can be presented as a project for both mitigation of climate change, but also for adaptation.

  4. Enhance the role of intermediary companies to bridge financing gaps between banks and farmers: This could be either in the form of direct funds or by establishing a contract which ensures the installation of SPIS financed by the intermediary company and in return a proportion of the agricultural produce from the farmer. The establishment of committees could ease the communication with the farmers.

  5. Engage banks in the agricultural sector: Banks could promote more intensively the availability of loans and financing packages for the agricultural sector. Farmers’ associations and unions could act as guarantors for the farmers. Besides, a certain amount of the bank loans may be allocated for financing SPIS. In Sudan, 12% of loans are dedicated to finance solar energies.

Next steps

By the end of the three day event the key organizers, namely Dr. Nisreen Lahham, Dr. Hammou Laamrani and Dr. Kamel Amer have proposed to organize a national and regional event that includes all stakeholders involved in potentially financing SPIS (banks, private sector) to discuss on ideas and alternative financing mechanisms. In addition, the development of business models, which can be adopted by farmers should be initiated. After all, the development of a policy paper, that is directed to decision makers in the Arab region, and is building on the recommendations of this event, was suggested.

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