The Forum see the following as important aspects and policies to promote energy services:
・Efforts should be made to bundle additional services with off-grid electricity. For example, it is possible to use the distributed electricity services delivery infrastructure for solar home systems (i.e. the "virtual grid" consisting DES dealers, installers, maintenance technicians etc.) to also provide LPG for cooking. This may ultimately lead towards a model based on distributed energy services.
・Greater community leadership and decentralized decision-making in energy policy will not only ensure a more appropriate matching of technologies with variegated and changing local needs, but also allow for greater "buy-in" by community residents to DES project initiatives.
・Judicious use of subsidies for DES may be appropriate due to a combination of environmental and social concerns. In particular, there is a chronic gap between need for and willingness to pay for DES. Moreover, extensive subsidization can aggravate long-term maintenance problems and unstable subsidies damage DES markets by creating unrealistic price expectations among users. Consequently, the larger the subsidies, the more important it is that they be embedded in a stable framework that guards against price/currency volatility and ensures maintenance.
・Targeting relatively poor customers helps to ensure that subsidies do not accrue to customers who would buy DES even without subsidies (so called, "free riders"). Nonetheless, budget constraints and the need to ensure an adequate level of customer contribution to system costs make it difficult to reach the poorest of the poor with DES. This problem may be mitigated by scaling down service levels to meet only the most pressing DES needs (e.g. one fluorescent light and radio), but attention should also be given to social and economic factors which inhibit scalability (such as imperfect credit markets, transaction and transportation costs and varied social norms).
・Wherever possible, programs should employ "smart" subsidies. For example, to avoid locking users into inferior technologies, subsidies should be technology-neutral (unless this raises administrative costs too much or conflicts with other program goals). Also, subsidies applied at the wholesale level have a large effect on end-user prices because they are magnified by each level of retail markup. It may also prove useful to minimize the cost of subsidies through processes such as competitive allocation.
・Finally, certain subsidy structures may be superior because their structure ensures adequate customer contribution to system cost and helps to build sustainable private markets that can outlive the subsidy program. Smart subsidies in this category may include providing below market interest rates on loans, reducing monthly fee for service payments. Hard currency loan guarantees are one useful tool as they build local DES lending infrastructure and reduce foreign exchange risk.
・In order to forestall utility conflicts with DES ventures, governments should seek to clarify and publicize their grid extensions (and other electrification) plans. This should involve a broad consultation process with NGOs, the private sector, community organizations and end-users. Policy makers should also consider the possible benefits of using small-scale DES as a stepping stone to larger scale DES (e.g. mini grids) systems and, where appropriate, grid extension made viable by higher electricity demand levels that have emerged among DES customers.
・Government policies should be structured to maximize private sector provision of DES while ensuring that long-term maintenance is adequate. Concessions to provide off-grid DES on a fee-for-service basis provide one useful model; however, care must be taken to ensure that concessionaires have adequate financial incentive to service new customers, remain in business for the long-term and provide on-going quality maintenance to their customers.
