“Right market incentive and private capital is needed to accelerate existing solutions. We with our grant money are trying to cover risks of the private sector by either taking a lead and demonstrating it works. We would like to work more and more with such innovators and build a supportive market ecosystem for innovation, demonstration and diffusion”

Mr. Biswarup Banerjee, IKEA Foundation speaks about the Foundation’s strategy to support vulnerable communities build resilience to climate change, by keeping them at the centre of different interventions..

Q1: The renewable energy segment has been one of the key areas of focus for the IKEA Foundation. Within this space, what are the types of solutions that the Foundation has a focus on and sees as critical towards empowering communities to become more resilient to climate change?

We are looking at renewable powered solutions that can help people improve their productivity, income and add to their quality of life. People are at the centre of everything we do. We ask ourselves what are the energy needs they have and how can renewable energy solve these gaps. Energy, as we all know, is a critical enabler in everyone’s life but not all have access to a quality and reliable supply. Close to 700 million people globally live in areas that are energy deficit. This means they don’t have an adequate supply of energy to run their household, business, have quality health and education services or keep themselves warm or cold during extreme weather conditions. The good news is now we have efficient and renewable powered technologies which can meet the demand quite independently of the grid. A farmer doesn’t have to wait for grid electricity to irrigate his field, a small shopkeeper to refrigerate perishables, an artisan or a manufacturing unit to run their equipment and machines. These all can be powered through efficient appliances run on solar. Similarly for the services like health, education, transport, information kiosks, weather forecasting stations, soil testing units, you can draw a long list of these, all need energy to run reliably. And these can be powered by renewables. The estimated demand for these products and services in India and Africa is more than USD 100 bn.

To advance the space of renewables in productive use applications we are supporting the market journey of solar powered innovations. This includes solutions in the pumping, cooling, drying, lighting, and grinding space. We look for business models that are promising and can be scaled. This means supporting pilot demonstrations, getting data on system performance and impact on incomes, productivity and improvement in quality of life. And once we see promise, we try to scale these solutions by supporting other building blocks for market acceleration. This includes creating demand, distribution and after sales infrastructure, supporting capital needs for the enterprises, affordable end-user finance and supportive public policies. We provide grants to more than 21 non-profit partners globally active in technology, finance, data, policy, and incubation.

Solar power technologies have an important role in building the climate resilience and adaptation capacity of people in rural areas who are disproportionately affected by climate change without being significant contributors. Like a smallholder farmer in face of changing weather patterns who needs better intelligence on weather, soil health, efficient water management, irrigation, pest management and market linkage. We are trying to see how all these services can be weaved together with farmers at the centre and plug in technology and energy gaps. We also have an important task here to avoid solution fragmentation by bringing the end-user to the centre.

Q2: The recent partnership of the IKEA Foundation and SELCO Foundation is focussing on upgrading primary healthcare facilities with clean energy systems, which demonstrates the multi-level impact on health and climate. Are there other impact areas that lie at the intersectionality of climate-tech solutions and other sectors that the Foundation sees as high priority and merit financing support?

The connection between reliable energy and improved health services is evident. We need a reliable and adequate supply of power to run the operations of a health clinic, vaccines require efficient cold chain and telemedicine requires plugging in a computer and internet connection. We have been working on the ground with different partners to establish that reliable and quality energy supply will go a long way in strengthening the existing health services. We are convinced of the potential to incrementally improve health services through solarisation especially in the rural areas where you often require a three phase connection to run your hospital load but there are challenges in securing it from the grid. The running costs of back up diesel generators are also becoming expensive and have a carbon footprint. Seeing the potential we recently announced our support to solarise 2,500 health clinics across 12 states of India. Efficiency and solar go hand in hand, so other than powering the health clinic loads, we will also support efficiency in built environment, cooling and heating requirements of the health clinics.

Another area where energy is a critical enabler is education and livelihoods. With online or tech supported education, energy is a critical input. On a very simple level, school toilets require water to function and that requires energy to store water in overhead tanks. The mid-day meal kitchens require proper ventilation, light and energy-efficient cooking. Classrooms need fans and lights. We see how critical these are in terms of student attendance especially for female students. Energy has an important role here. To build livelihoods a stable energy supplies is needed. In India there are millions of home-based industry from weaving, carpentry, pottery, black smithing, brass making and more, which all need a stable energy supply. Farming and allied activities need pumping, cooling, lighting, heating, drying, and processing support which cannot happen without energy. A lot of processes which are manual and labour intensive can be automated and made more productive using renewable energy. We are looking very closely into these areas and supporting innovators and entrepreneurs who are trying to solve these problems. There are challenges of course in terms of technology and finance but these are solvable. The right market incentive and private capital is needed to accelerate existing solutions. With our grant making, we are trying to cover the risks of the private sector by taking the lead and demonstrating it can work. We are working to build a supportive market ecosystem for innovation, demonstration and diffusion.

Q3: The recent collaboration of the IKEA Foundation with the Climate Policy Initiative emphasizes on supporting ‘productive use renewable energy’ (PURE) companies to raise the capital they need to grow. What would be the criteria or key parameters for the Foundation to consider an enterprise in this sector, for extending financing support? Apart from grant support, what are the other support areas that the Foundation is looking to extend to renewable energy startups and beneficiary communities, under this Collaboration?

Climate Policy Initiative, based on their success with raising commercial capital for the roof top solar segment, has taken up the challenge to work with companies that are providing solutions to improve livelihoods and income prospects of people in rural and semi-urban areas. This includes companies active in the pumping, drying, cooling, processing space that are using renewable energy. Climate Policy Initiative will provide support to these companies and help them network with financers to raise needed capital to grow their business. Improving livelihoods and incomes through renewable powered solutions is one topic where we strongly resonate with the Climate Policy Initiative. And we look forward to working with them and other like minded players to bring all their network and expertise to accelerate investment in this space. Climate Policy Initiative has conducted a landscape analysis in India where they identified more than 112 companies working on the intersection of livelihoods and renewables and has filtered 11 companies for support. The companies have been identified based on their growth potential, track record, need for capital to grow and clear appetite to scale their impact.

Other than the Climate Policy Initiative we have a partnership with the Powering Livelihoods Initiative run jointly by CEEW and Villgro, where they are providing tailor made assistance to ten promising early stage renewable energy companies to expand their market reach. We have a similar partnership with Acumen who, other than providing technical assistance, will also invest in five such early stage companies. We also have implementation pilots with the Tata Trusts , SELCO Foundation and GIZ which provide opportunities and platforms for these companies to reach out to their target segments. We would like enterprises to use the implementation projects as an opportunity to strengthen their presence in the locations where these products and services are in demand. We encourage them to set up a good distribution and after sales network. Consumer financing for these products will only come in where after sales services are robust and that will create a virtuous demand cycle for accelerating adoption of these technologies.

Q4: Other than renewable energy companies are you also looking at companies in other sectors of climate?

Yes. People and Planet is our focus. And we are looking at regenerative agriculture and waste recycling. Soil health and efficient water management are important areas. We are supporting enterprises working towards restoration of degraded lands, improving biodiversity, and helping farmers with better land and water management practices. In waste recycling, we have launched projects on plastics and textiles waste recycling and management. Waste recycling is a part of our larger green jobs creation efforts. We believe protecting the climate and economic growth can go hand in hand and there is a need to support the workforce transition to green jobs. Many entrepreneurs are trying to solve the problem of waste while creating new jobs in climate protection, our aim is to support these entrepreneurs and their efforts.

Background of Ikea Foundation

The IKEA Foundation works to bring about substantial change that enables families living in poverty to create sustainable livelihoods and lessen the effects of climate change. Through long-term strategic partnerships with both large and small organisations, it aims to find innovative solutions and to inspire policymakers and other funders.