Business Model Scenarios and Suitability: Smallholder Solar Pump-based Irrigation in Ethiopia

Abstract

This report outlines a business model approach to assessing the feasibility and for encouraging investment in smallholder solar pump irrigation. It also proposes a new methodology for mapping the suitability of solar energy-based irrigation pumps. The proposed business model framework and the methodology for suitability mapping are applied to Ethiopia as a case study, based on data from existing case studies and reports. A brief analysis outlines the regulatory and institutional context for investment in solar pump irrigation, and the ways in which it both constrains and attempts to support investment. The report identifies and outlines three business model scenarios that present opportunities for investing in smallholder solar pump-based irrigation, which would contribute towards sustainable intensification for food and nutrition security. The business model scenarios are based on the value proposition of supplying water to smallholder farmers for irrigated agricultural production. Analysis of potential gains and benefits suggests that direct purchase of solar pumps by farmers is feasible, and that out-grower schemes and pump supplier options with bundled financing offer promising solutions. The potential constraints that different investors may face in up-scaling the business models are also discussed, particularly within institutional, regulatory and financial contexts. The report provides development actors and investors with evidence-based information on the suitability and sustainability of solar pump irrigation in Ethiopia, as well as suggestions for helping to enable smallholders to invest in individually-owned, smallholder photovoltaic (PV) solar pumps.