Theme
£5 / 2008 54 ISSUE 67 — 2015 67 — ISSUE www.hedon.info A publication of the BOILING POINT / POINT BOILING
AND POVERTY REDUCTION AND POVERTY A PRACTITIONER’S JOURNAL ON ON JOURNAL PRACTITIONER’S A STOVES ENERGY, HOUSEHOLD
plus interviews with Akon Lighting Africa and DOEN Foundation, helplines, sponsor news and more... plus interviews with Akon Lighting Africa and DOEN Foundation, helplines, sponsor news Aggregating micro-grid and nano-grid projects to scale off-grid solar – p18 to scale off-grid and nano-grid projects micro-grid Aggregating Modern – p14 investable village power projects design principles for Powering Myanmar through solar home systems – p7 Powering Myanmar through Catalysing decentralised renewable energy market transformation – p2 Catalysing decentralised renewable
and Climate Change Decentralised Energy Decentralised Energy Boiling Point is a practitioner’s journal for those working with household energy and stoves. It deals with technical, social, financial and environmental Contents issues and aims to improve the quality of life for poor communities living in the developing world. Theme Editorial: Decentralised Energy and Climate Change 1 Welcome… Catalysing decentralised renewable energy market transformation: 2 The Bijli experience to the latest edition of Boiling Point. We strive to make the Jarnail Singh journal as accessible and participative as possible, and welcome Powering Myanmar: Brighterlite’s solar home systems 7 any comments or suggestions by email or post. Please see the Jørund Buen inside of the back cover page for details on how to contribute papers to future issues. Boiling Point is published by the Modern design principles for investable village power projects 14 HEDON Household Energy Network (www.HEDON.info). Stewart Alexander Craine Aggregating micro-grid and nano-grid projects to scale off-grid solar: 18 Editorial board A practitioner’s perspective Sandeep Giri, Anjal Niraula Boiling Point Coordinator: Karima Hirji (HEDON) Guest Editors: Jeroen Gerlag, Subaskar Sitsabeshan (The Climate Group) Viewpoints Grant Ballard-Tremeer, Andrew Barnett, Raffaella Bellanca, Interview with Akon, Co-Founder of Akon Lighting Africa 10 Leslie Cordes, Jack Dedman, Karabi Dutta, Ben Garside, Dick Jones, Kavita Rai and Luc Severi Interview with Jeff Prins, Programme Manager of DOEN Foundation 22 Opinions expressed in articles are those of the authors and not necessarily those of HEDON. We do not charge a subscription to Boiling Point, but welcome Helpline donations to cover the cost of production and dispatch. Expert response by Mohua Mukherjee and Padu Padmanaban 12
Expert response by Donee Alexander and Seema Patel 24 Boiling Point. HEDON Household Energy Network 1 Bromley Lane Sponsor News Chislehurst, BR7 6LH, UK HEDON News – Latest news from HEDON 25 Telephone/Fax: +44 (0) 20 30 120 150 Karima Hirji Email: [email protected] The Climate Group News – Latest news from The Climate Group 26 Jeroen Gerlag, Subaskar Sitsabeshan
Website link GIZ News – Latest news from GIZ 30 Look out for the @HEDON link at the end of each article. Caspar Priesemann, Monika Rammelt This easy to use feature links directly to the online version of the article, together with extra weblinks and resources. Global Household Energy News Latest News 40 General www.HEDON.info/NGUN Energy market systems development: Lessons from the urban 32 food processing sector in Indonesia * Full article online Will Baron, David Nicholson * Author profile and Demand side analysis of warm comfort improvements in high cold 36 latest contact details regions: A case from Huancavelica, Peru * Article websites Mariana Jiménez, Lukas Kahlen
Meet us @HEDON Call for papers ISSN 0263-3167 (Print) ISSN 1757-0689 (Online) Boiling Point forthcoming themes 41
Cover photo: A family in the village Brojoballabhpur in Sunderbans, West Bengal – one of the Bijli sites. (Source: Jarnail Singh) Design by Dean Ford Creativity Ltd. +44 (0) 20 7000 1055 www.deanfordcreativity.com
We would like to extend our thanks to our sponsors: The Climate Group, GIZ and StovePlus for financial support towards this edition. EDITORIAL Editorial
ISSUE 67 Decentralised Energy and Climate Change
lobally 1.4 billion people lack access to electricity. This delivery model and the current decentralised energy landscape is almost a fifth of the world’s population. But energy in the African continent. While Akon stresses the importance Gdemand is rapidly increasing, driven by economic of the initiative’s for-profit model, an interview with Jeff growth and a growing population. Consequently an increase of Prins, from the Dutch Postcode Lottery’s DOEN Foundation, greenhouse gas emissions leads to climate change- a continuing illustrates how Foundations can tackle the interlocked challenge for human development. Decentralised renewable challenges of energy access and climate change through the energy offers an ideal platform to leave behind fossil fuel based evolving role of philanthropy. energy production and address some of the challenges posed This issue’s two Helpline sections further delve into by climate change. The link between decentralised energy specific challenges faced by decentralised renewable energy and climate change must be explored in order to understand practitioners. Mohua Mukherjee (World Bank) and Padu these twin sustainable development challenges and the need to Padmanaban (Ex- USAID) address one of the most challenging prioritise these issues at the global scale. issues facing energy providers in rural villages- the question This issue of Boiling Point explores decentralised renewable of unreliable data for grid expansion and what happens when energy initiatives from around the world with theme articles state provided grid electricity reaches the community that focused on projects in South Asia. An article on The Climate practitioners provide electricity access to. The second Helpline Group’s initiative ‘Bijli – Clean Energy for All’, takes a close look section features an expert response from The Global Alliance at the decentralised renewable energy market transformation for Clean Cookstoves who answer a question from Africa experiences in India. The article illustrates how grants can regarding financing incentives for efficient cookstoves that catalyse financial and institutional innovation among existing reduce black carbon and other short lived climate pollutants. stakeholders and identifies lack of access to affordable debt as a Finally, this issue of Boiling Point includes wider household major bottleneck to scaling up renewable off-grid energy access. energy access articles. Mercy Corps share lessons learnt from Other theme articles include an exploration of Brighterlite’s energy market systems development from the Indonesian urban technologically innovative solar home system business model food processing sector and Micro-Energy International present in Myanmar that draws on lessons learnt from Pakistan and a research study on the demand for technologies that improve Kenya, as well as two articles that focus on Nepal’s decentralised the warm comfort performance of poor households in a cold renewable energy landscape. The article ‘Modern design mountain region of Peru. principles for investable village power projects’ from Village As the United Nations Sustainable Development Goals are Infrastructure Angels explores Nepal’s current subsidy policy, redefined with important focus on energy access and climate recommending a modern mini-grid design philosophy. Further, change, this issue of Boiling Point seeks practical insights into an article from the Gham Power team focuses on scaling up best practices and learnings from practitioners who bring the mini-grid and micro-grid models in Nepal and the potential for challenges and opportunities to light, with the hope of moving saving carbon emissions. towards a prosperous, low carbon future. Exploring decentralised energy projects in Africa, an interview with international music star Akon, on the ‘Akon Subaskar Sitsabeshan and Jeroen Gerlag (The Climate Group) Lighting Africa’ initiative, describes the organisation’s solar Karima Hirji (HEDON Household Energy Network)
Boiling Point. ISSUE 67 — 2015 1 THEME Theme PEER REVIEWED Catalysing decentralised renewable energy market transformation: The Bijli experience
Keywords: Bijli; Delivery models; Off-grid energy; Decentralised renewable energy; Financing mechanisms; India
Author Jarnail Singh The Climate Group Suite#1203, 12th Floor Chiranjiv Tower, Nehru Place New Delhi, 110 009, India
Picture 1: Bijli-Clean Energy for All initiative (Source: The Climate Group)
Access to clean energy has clearly emerged as a focus of the global development community in the recent past. At the same time, the market for decentralised renewable energy (DRE) has grown at an unprecedented pace and thus holds momentous promise for universal energy access. Access to finance is widely accepted as a major challenge given that the private sector views decentralised energy as much riskier than other alternative, straightforward investment options. This article presents the experiences from Bijli-Clean Energy for All initiative that has demonstrated the use of grants to catalyse financial and institutional innovation among existing stakeholders within the Indian DRE sector. The programme has supported different delivery models to implement innovative financing mechanisms including end-user financing, trade-financing, working capital as well as debt collateralisation. The article identifies access to affordable debt as the key bottleneck in scaling up energy access through DRE. The author highly recommends creation of a futuristic and innovative debt financing facility that would emerge as the go-to agency for India’s DRE financing needs in the future.
Introduction issues such as energy access, there is still would invariably have to reach all new an evident need to strengthen action on urban areas and 30% of the currently un- ccess to clean energy has clearly the ground by building institutional and electrified rural populace. The remaining emerged as a focus of the global financial processes that could enable 70% of rural areas would be the direct Adevelopment community in the sustainable energy access to 360 million market for decentralised energy products recent past. Notable initiatives include people in India who currently lack access as well as services by 2030 (SE4All, 2015). the United Nation’s ambitious Sustainable to electricity (The Climate Group, 2015). Drawing from these facts, it is clear that the Energy for All (SE4All) as well as inclusion These numbers would increase significantly market for decentralised renewable energy of energy access as one of the post-2015 if the people with unreliable electricity (DRE) is growing at an unprecedented Sustainable Development Goals (SDGs). were added to the ones without any pace and thus holds momentous promise While international initiatives are catalytic access at all. To achieve universal access, for universal energy access (The Climate in drawing global attention to local SE4All projects that the electricity grid Group, 2015).
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Figure 1: Three step approach for large scale transformative action Figure 2: Coverage of Bijli initiative
The need for DRE is heightened when need for international charity/aid funds Testing financing mechanisms considered in the light of the emerging to support market mechanisms that then and delivery models climate change and green growth narra- enable social (for-profit) businesses to tive. If 1.2 billion people were provided reach out to the large customer base still In order to co-develop delivery models that with adequate electricity access through underserved. While many argue that the could use grant funds to later encourage fossil fuel based generation systems, glob- majority of funds must come from the private sector involvement, the states of al carbon emissions would increase signifi- private sector, development finance would Uttar Pradesh, West Bengal, Maharashtra cantly (Alstone et al., 2015). Primary data best serve as the first loss cushion thereby and Jharkhand were selected (Figure 2 collected from field visits show that if 77 allowing private investments to flow into and Table 1) for the Bijli initiative. These million households in India were to keep the market. states were chosen given the presence of using kerosene or other fuels for domestic This article presents analysis, learnings a large underserved rural population as lighting purposes, the country would con- and next steps from the Bijli – Clean well as a variety of other factors including tribute almost seven million tons of car- Energy for All initiative that was conceived presence of implementation partners and bon dioxide every year, particularly black by The Climate Group, with principal favourable government policies. carbon from fuel based lamps. Scaling up funding support from the Dutch Postcode DRE would not only bridge the access to Lottery (DPL). Delivery models: Implementation energy gap between the rich and poor but partners and financing mechanisms also pave a way for low carbon growth by The Bijli initiative virtue of clean energy deployment. All but one of the delivery models tested The International Energy Agency The underlying belief for the Bijli in step one of the Bijli initiative used solar (IEA) estimates that investments of initiative is that for large scale photovoltaic (PV) technology to generate approximately US$ 640 million will be transformative action to take place, electricity. The Climate Group worked required over the next 20 years to achieve the leaders of the world have to be with a variety of implementation partners universal energy access (IEA, 2014). On convinced. These leaders do not only who used different financing mechanisms the other hand, others believe that represent high-level opinion but also for the following energy delivery models: reasonable access to energy (electricity) national and local thought leaders who Handheld solar lights model (HSL): In could be provided to global populations galvanise action at their respective levels. West Bengal, SwitchOn-ONergy markets with one third of the cost that IEA Given this understanding, a three step handheld solar lanterns (containing an estimates (Craine et al., 2014). The approach (Figure 1) was adopted under LED lamp, mobile phone charging port, Climate Group (2015) estimates that the Bijli initiative to scale up innovative rechargeable battery and individual solar India’s DRE markets are expected to delivery models of clean energy services panel) as well as solar home lighting systems increase to US$ 375 million by 2018. It for rural consumers. The first step of this in selected villages through NGOs, micro- is clear that investments in the sector approach is to co-develop projects to test finance institutions (such as the Bagnan need to increase hugely and that there financing and delivery models for off-grid Grameen Mahila Sammelan (BGMS)) as also needs to be an upscaling of effort in energy (electricity) access in rural areas. A well as through their retail supply partners. private sector investments. Up till now rigorous evaluation framework assisted Solar home systems model (SHS): In however, the private sector has perceived by real time data is the second step, and Uttar Pradesh, Simpa Networks and in the DRE sector as too risky or far less finally communicating the business case Maharashtra, Small Scale Sustainable rewarding when compared to other for DRE and off-grid energy to global and Infrastructure Development Fund (S3IDF) alternative, straightforward investment national leaders to mobilise transformative provide low cost financing for SELCO options. There is a therefore a strong action is the third and last step. home lighting systems that consist of a
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Main source India Maharashtra Uttar Pradesh West Bengal of lighting:
Households % of total Households % of total Households % of total Households % of total (in millions) households (in millions) households (in millions) households (in millions) households Electricity 166 67.2 20 83.9 12 36.8 11 54.5 Kerosene 77 31.4 3.5 14.5 20 61.9 8.8 43.5 Solar energy 1 0.4 0.05 0.2 0.1 0.5 0.2 1.2 Other 1 0.4 0.2 0.9 0.4 1.1 0.1 0.6 sources No lighting 1.1 0.5 0.2 0.9 0.7 0.2 0.1 0.5 Total 246.1 100 23.95 100 33.2 100 20.2 100 Households
Table 1: Source of lighting figures in Bijli implementation areas
Bijli partner State Districts Number of Population Households Reached
SwitchON– ONergy West Bengal 14 districts 8297 41 485 OMC Power Uttar Sitapur, Unnao, and Hardoi 1300 6500 Pradesh districts Small Scale Sustainable Maharashtra Talode Taluk, Nandurbar 720 3600 Infrastructure Development district Fund and SELCO Simpa Networks Uttar Sitapur, Unnao, and Hardoi 250 1250 Pradesh districts Mera Gao Power Uttar Sitapur, Unnao, and Hardoi 494 2470 Pradesh districts Naturetech Infrastructure Uttar Sitapur and Unnao districts 106 530 Pradesh Mlinda Foundation West Bengal, various locations 237 1185 Jharkhand 11 404 57 020
Table 2: Bijli dashboard highlighting partner and state-wise progress (Source: TCG Analysis, 2015)
Energy Partner Market Size Delivery Policy and Environmental risk Costs/ regulation Financing required SwitchON – ONergy Medium High High Medium Small Scale Sustainable Low High High Low Infrastructure Development Fund and SELCO Simpa Networks Low High Medium Medium Mera Gao Power Low High Medium Low Naturetech Infra Low Low High Low
Table 3: Heat map showing key risks perceived by Bijli partners (Source: TCG Analysis, 2015) single solar panel/module mounted on a as well as anchor clients including telecom Implementing new financing roof, connected via a voltage regulator to shelters and petrol pumps. While OMC signs mechanisms a battery that provides direct current (DC) up longer term power purchase agreements for lighting and mobile charging. While (PPAs) with telecom shelters for assured bulk Four specific and different financial Simpa Networks is a fee based service of its revenue, Naturetech Infra employs a mechanisms were tested at the enterprise delivery model, the SELCO model is an prepaid tariff to ensure timely repayments. level to promote access to electricity for ownership model. Pico-grids model: Mera Gao Power low-income households (Figure 3). While Micro-grid model: In Uttar Pradesh, (MGP) in Uttar Pradesh and Mlinda all the mechanisms are market driven, Naturetech Infra and OMC Power were Foundation in West Bengal (and later grant funding was deployed to create selected as a part of the India Off-grid Energy Jharkhand) provide DC and alternating institutional mechanisms to ensure cyclical Challenge to provide a variety of clean current (AC) based electricity services grant funding deployed with regards to one energy services to a group of households (lighting and mobile charging) to their time product delivery/ capital expenditure. by supplying power through solar micro- customers. While MGP collects payments In all cases, separate bank accounts were grids. These systems consist of a set of solar from individual consumers, Mlinda opened to monitor and manage revolving PV panels for electricity generation at a forms Joint Liability Groups (JLGs) funds at the local level. In the case of end- centralised location, a battery pack, and a among ultra low income communities to user financing (S3IDF), a mechanism was micro-distribution network in the community ensure timely payments. created to make the solutions affordable
4 THEME Figure 3: Financing mechanisms adopted by Bijli – Clean Energy for All
in the absence of formal banking facilities. ONergy has not only been able to deploy poses as a major risk across all the A permanent institutional arrangement more than three times that number but has energy partners except for Naturetech was established in the Nandurbar district also introduced newer and larger products to Infra who have lowered their overhead of Maharashtra where a local community the market. costs with the use of technology and development financing institution (CDFI) improved their revenue streams. called Bhagini Nivedita Gramin Vigyan Building evidence through 4. Government policies and regulations Niketan was responsible for energy needs project evaluation on renewable energy have a significant assessments, sales, installation and after impact. For example, policies on avail- sales service. With reference to the three step approach ability of grid-based power poses a high A bank account was opened closer to (Figure 1), the second step was to con- risk for most of the energy partners. the client base thus serving as a stronger duct a rigorous evaluation. This was done Alongside the key challenges of financing logistical point for the deposit of daily by the Research Triangle Institute (RTI and cost of delivery, key practical solutions collections. This avoids delays in deposits, International), for Bijli implementation emerged from regular monitoring visits rerouting of collected funds as well as partners based on the relevance, effec- as well as project evaluation of the Bijli security hazards. tiveness and efficiency of their respective initiative and are detailed below. For Simpa Networks, an experiment financing mechanisms and delivery mod- was conducted in Sitapur district to conduct els to achieve sustainability. Human resources further research on the optimum financing The sustainability of a DRE intervention mechanism for deeper customer penetration is driven to a large extent by the types of — A Loan Monitoring Team (LMT) with in any given village. The experiment allowed risk that are mitigated in the design of the members from both partners and a Simpa Networks to understand the needs of business strategy or programme. The risks financial advisor is imperative. This Table 2: Bijli dashboard highlighting partner and state-wise progress (Source: TCG Analysis, 2015) the off-grid customer segment, such as their were identified based on the interactions not only ensures monitoring of regular ownership mindset, their price sensitivity, of the various stakeholders such as the repayments but also helps in ensuring demand for certain kinds of products, funding agency, project partners, target financial discipline and a robust need for trusted channels of distribution, population and policy-makers. When financial process. importance of product quality and tendencies evaluating scalability and sustainability — Appointment of dedicated collection to move to cheap energy substitutes. as the scope of intervention programmes managers to oversee all collections In West Bengal, a three pronged increased, challenges with regards to ensures timely collections and deposits. approach was adopted to make a strong replicability and resource planning were — Given the flexibility of system integra- value proposition for customers and JLGs among other factors that were considered. tors like ONergy, it is a non-negotia- to opt for pico-grids as opposed to diesel As a part of the evaluation, the five ble condition to train a local resource gensets. This was executed by utilising Bijli Bijli partners (ONergy, S3IDF, MGP, person who can work as a sales agent funding in order to: Collateralise a part Naturetech Infra and Simpa Networks) as well as a maintenance technician. of the debt to the entrepreneur who was were qualitatively assessed on their This particularly boosts demand for investing a small amount in the pico-grid business model (their technology, delivery ONergy products which are being infrastructure; Employ a diesel-parity grant model and financing mechanism) and on continuously improved to meet the to make the offering competitive to the whether the new financing mechanisms energy demands of the households diesel gensets; and Leverage a part of Bijli employed were able to mitigate the risks through an optimally assembled SHS. funding to raise more capital from sources that may exist in the near future for the like Milaap (a crowdfunding platform). sustainability of their business model. Financial management So far, Bijli has reached out to 50 000 households directly (Table 2). While these Key findings of the evaluation — A separate bank account should be numbers are miniscule in view of the current set up for the revolving fund which 360 million people in need, the initiative has 1. Market size does not pose a risk for should be governed and managed by had a catalytic impact on the sector by virtue these business models, rather it is an a dedicated loan management team of its financial and institutional innovation. opportunity to scale up given the fact towards energy related disbursals. This Bijli funding has helped enterprises and non- that a significant share of the rural pertains mostly to end-user financing. profits try new models by setting up revolving poor in these regions are deprived of — An end-user financing mechanism funds which would not have been possible access to modern energy. should be created to make solutions through commercial capital alone. For 2. The growing market share of renewable affordable in the absence of formal example, the total grant support for the trade energy based products is an encourage- banking facilities. financing model deployed by ONergy would ment for these energy partners. — Involvement of anchor clients such have only been able to deploy 2500 handheld 3. The cost of service delivery and therefore as owners of telecom shelters, petrol lights. In the presence of a revolving fund, flow of steady and affordable finance pumps and irrigation pumpsets have
Boiling Point. ISSUE 67 — 2015 5 THEME
boosted revenue streams to market Most commercial banks are not willing initiative. To start with, the fund will be players but very few have been able to to lend to DRE enterprises, even at higher geared towards investing in energy access sign long term PPAs with these clients. interest rates, because of regulatory and decentralised generation projects in uncertainties, lack of collateral, perceived India where either the business models Business development services risks and because the ticket sizes of these are innovative and mainstream capital loans are too small. A working capital perceives them as too risky, or affordable — Working with a local partner such loan could be as small as US$ 10 000 and innovative debt instruments are as a rural bank or micro-finance in- while long term asset financing could be required. The Climate Group expects the stitution ensures robust community US$ 100 000, both of which are small fund to be operative from the end of 2015. outreach and ample touch points for in their respective segments. Banks and The Climate Group recently convened quick feedback as well as repairs and other financial institutions willing to lend the first ever India Off-Grid Energy Summit replacements. to DRE enterprises have found it difficult (IOEGES) in New Delhi on 19 August — It is important to conduct an energy and time consuming to get approval of 2015 in order to mobolise sector leaders needs and ability to pay assessment projects and apply for benefits such as and practitioners to galvanise pragmatic (based on cash flows) of the targeted subsidies. Due to these difficulties, most action towards universal energy access. households to accordingly provide suit- DRE enterprises raise funds through a This essentially represents the third step of able solutions to them. mixture of grants and equity alone. the three step approach discussed earlier. — In the case of MGP, all the technicians The summit was a huge success with over and entrepreneurs are its custom- Conclusion 300 stakeholders congregating together to ers. Therefore, the intervention of- discuss the future of DRE in India and the fers significant economic prospects in Financing from non-profit, programme- associated steps to take it forward. More the region. related investments are best suited for information on the outcomes of the summit Based on primary surveys, debt financing purposes that private investors would can be found in The Climate Group News emerged as the primary concern of DRE like to venture into. However, expecting pages of this issue. enterprises, particularly for the enterprises competitive commercial returns in the operating in completely for-profit mode. short-medium term from the DRE sector References This is primarily because any grant funds (that is still in its nascence) could be they receive are highly tax-inefficient, for detrimental. Long tenure loans with Alstone, P., Gershenson, D., example these enterprises are not allowed flexible terms (5-10 years) and low interest Kammen, D. M., 2015. Decentralised to use that income as a track record to rates could therefore unlock the true energy systems for clean electricity secure loans in the future. Furthermore, potential of these budding enterprises. access. Nature Climate Change. pp. these enterprises have to pay as much as This will only be possible with softer 305-314 30% corporate and service tax on grant capital flowing into the commercial capital Craine, S., Mills, E., Guay, J., funds received in any assessment year. In stream and collectively known as blending 2014. Clean energy services for all: India, there are a number of challenges financial structures. The Climate Group’s Financing universal electrification. in raising private investment for DRE report titled ‘The Business Case for Off- New York, USA. enterprises, particularly debt that is grid Energy in India’ presents further IEA, 2014. World Energy Outlook catalytic for long term scale-up. DRE detailed recommendation on innovative 2014. International Energy Agency: enterprises face prohibitively high interest financing structures to ensure long term Paris. rates (18-22%) in the domestic market, capital availability for this sector and can if accessible. On the other hand, foreign be accessed @HEDON. SE4All, 2015. Progress toward lenders such as impact investors have a A highly recommended next step for the Sustainable Energy 2015 - Global difficult time getting regulatory approvals Bijli initiative is the creation of a futuristic Tracking Framework Report. United to lend in the Indian market. When Indian and innovative debt financing facility that Nations: New York. DRE companies raise capital from abroad, would emerge as the go-to agency for DRE The Climate Group, 2015. The regulators ensure that an insignificant financing needs of the country in the short Business Case for Off-grid Energy in amount of capital goes out as interest term as well as distant future. Currently India. The Climate Group: London. and also prevent short-term debt coming there are such mechanisms available but into India. Furthermore, providing loans none are completely focused on clean www.HEDON.info/JYXB as corporate social responsibility is not energy. Most have a diverse portfolio permissible in India and many impact including agriculture, health, small and * Access the full report on the Bijli initiative investors are more interested in equity medium enterprises and education. The * Full list of references rather than debt. Climate Group is working on creating such a fund together with partners in the Bijli Meet us @HEDON
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PEER REVIEWED
Powering Myanmar: Brighterlite’s solar home systems
Keywords: Brighterlite; Myanmar; Fee-for-service; Solar home systems; Mobile payment; Pay-as-you-go
Author Jørund Buen Co-Founder/ Partner Differ Storgt 26, 0184 Oslo, Norway
Picture 1: Subedar Riaz Ahmed from Jhelum District (outside Islamabad, Pakistan) is a Brighterlite subscriber as well as a proud retailer (Source: Brighterlite Pakistan)
Brighterlite has started a distribution of solar home systems in Myanmar, using a fee-for-service business model. Only one-fourth of Myanmar’s population has grid access today and mobile networks have developed much quicker than the electricity grid has expanded. The off-grid mobile charging delivered by Brighterlite is therefore in demand. The business concept solves two major problems for customers at an attractive price: the risk related to buying poor and cheap equipment, and the large investment barrier for buying high-quality equipment. Brighterlite estimates that each solar home system will reduce around 0.5 tons of carbon dioxide emissions per year, if kerosene use is the baseline, and many households will reduce or stop using kerosene, a petroleum product, for lighting. With 7-9% of the kerosene converted to almost pure black carbon (a highly potent greenhouse gas with a global warming potential 3200 times that of CO2 over a 20-year horizon) Brighterlite’s solution will also substantially reduce environmental and health impacts of households’ energy use.
Introduction The government, alongside Telenor Robust low-cost solution for and Ooredoo (the two mobile network automated payment control n Myanmar, only around one-fourth operators who received government of the population is connected to the licenses in 2014) plan for such a scale-up. Brighterlite has developed an innovative, Ipower grid (and far less than that in rural Since the pace of power grid expansion proprietary mobile payment application areas), leaving almost 40 million without is much slower than this, off-grid phone to verify on-going SMS payments and grid-connection. The mobile phones charging will be in demand. Brighterlite, remotely controlled SHSs. The organisa- market however is booming. While only a wireless utility for the world’s poor, tion believes the payment application, 5% of people owned a mobile phone in therefore aims to install and operate two which also captures usage data is, to 2013, forecasts suggest this number will million solar home systems (SHS) in Brighterlite’s knowledge, the most robust increase to 90% in 2016 (GSMA, 2014). Myanmar within five years. low-cost solution for automated payment
Boiling Point. ISSUE 67 — 2015 7 THEME
Picture 2: The customer inserts a code received by SMS (text message) into the wall mounted Brighterlite box in order to activate usage of the SHSs (Source: Brighterlite)
control for off-grid solar globally. It can Telenor, using its mobile payments solution for a typical poor rural household. In case survive long periods without sunshine Easypaisa. Experience from the initial the grid is expanded to, for example, a new or other electrical charging and, since period of operation showed that due to village, one year after a household became it is not based on the global system for the frequent blackouts (grid-connected a Brighterlite customer, the household can mobile communication (GSM), it will households often do not have electricity choose to hand in its SHS to Brighterlite, survive generation changes in mobile com- more than eight hours a day) there is real get its deposit back and connect to the munication network. SHSs and appliances demand for Brighterlite systems among grid (however it is imaginable that many (TVs, fans, radios, lamps) leased out by grid-connected households as well. Due to will opt to keep the SHS instead, as it will Brighterlite (and assembled by Fosera) com- Pakistan’s hot climate, customers are also be much cheaper than a grid-connection bines high quality lithium iron phosphate very interested in fans. Myanmar is not as unless the latter is heavily subsidised). If (LiFePo4) batteries and LEDs; low weight, hot as Pakistan and its grid is not suffering the household had bought the SHS cash on low cost and long durability; and high as badly from blackouts, but blackouts are delivery, or entered a lease-to-own scheme, energy efficiency. indeed a problem. Learnings from Kenya’s it might not be able to pay for the grid When the customer pays through (TVs) and Pakistan’s (fans) projects have connection due to the SHS costs. Brighterlite’s mobile payment application, prompted Brighterlite to further understand The target users of Brighterlite’s PAYG a receipt is sent to the payment server. and incorporate local appliance preferences- technology solution in Myanmar are low- This server converts the amount received key to commercial success. to middle-income households in peri-urban to a number of days of access to use the and rural areas. They have very limited or no SHS and returns a code to the customer’s Removing customer risks access to electricity today. Baseline research mobile phone. The customer must then so far indicates that these households insert the code into the wall mounted Brighterlite, alongside many other compa- typically use dry cell (lead acid) batteries or Brighterlite box in order to activate usage nies, offers mobile-powered pay-as-you-go kerosene wick lamps for lighting, have few, of the SHS. Because each SHS has a (PAYG) solar electricity in other countries. if any, electrical appliances and may not unique serial number, which can be linked To our knowledge, Brighterlite is however be able to charge mobile phones at home. to the relevant user data, Brighterlite can the first company to adapt these experiences Grid or mini-grid expansion, subsidised by monitor the usage of each user without to the customer needs and framework con- the government or development aid, could doing site visits. ditions in Myanmar where mobile payment become a competitor in parts of the project Brighterlite recently obtained a grant solutions are embryonic and mobile bank- area but not during the project period, and from the Mobile for Development Utilities ing regulations are only partly ready. The even less so in rural areas. Furthermore, Innovation Fund, launched by GSM business model employed by the project, although this will not be the main target Association (GSMA) and UK Department as well as Brighterlite’s operations in gen- group, experience from Pakistan suggests for International Development (DFID). eral, is that of fee-for-service. Brighterlite Brighterlite SHSs may also improve access This grant will enable a road test for the will operate as an ‘off-grid utility’, perpetu- for Myanmar’s grid-connected households, payment processing system and product ally leasing out SHSs to its customers. The as a way to cope with frequent brown- and service offering under completely new customer pays an initial down-payment and blackouts. conditions in Myanmar as well as operate plus installments for specific periods. This Based on Brighterlite’s initial baseline on a purely commercial basis thereby approach has been chosen (over a lease to research as well as Greacen (2015), the eliminating the risk of becoming dependent own solution) because potential custom- typical amount a Brighterlite customer will on a changing government and developing ers often have experience with poor-quality spend in a month is below their current bank policies regarding subsidies. products and untrustworthy suppliers, whilst monthly energy spend. Many households regarding better-quality products as too cost- buying Brighterlite’s smallest SHSs could Brighterlite’s experiences in ly. The fee-for-service model removes risk for reduce energy spending and still get 10 Kenya and Pakistan customers because they avoid the trade-off times more light than today. The customers between cost and quality. Broken equipment for the largest systems may obtain services Brighterlite currently offers mobile-powered is immediately replaced (life-time warranty) (TV, radio and fans) that they currently pay-as-you-go (PAYG) solar electricity and it is possible to upgrade to a larger sys- completely lack or only obtain at a very in Kenya and Pakistan. The Kenya pilot, tem if required and for this, lower cost fi- high cost using diesel generators. initiated together with ecotourism operator nancing sources are made possible. Basecamp Foundation, initially targeted Fee-for-service also removes households’ Environmental and Masai Mara. Since then, Brighterlite has grid development risk. Myanmar’s health gains moved on to expand to other areas in National Electrification Plan aims at 7.2 South-West Kenya, mostly in the areas of million electricity connections by 2030 Conservatively assuming average SHS Bomet and Kisii. In Pakistan, Brighterlite (World Bank, 2014a) but their timing and output of 150 lumen (Brighterlite offers partners with mobile network operator location are uncertain, and even more so different system sizes in other countries
8 THEME
and we will evaluate which to launch in SHSs may also help women in Myanmar Naypyidaw. Fixed lines reached only 1%, Myanmar based on ongoing research). It is in another way. Research has shown that in Yangon and Naypyidaw. However, estimated that each SHS will reduce around women spend more time in the home than phone ownership and mobile connec- 0.5 tons of carbon dioxide (CO2) emissions men, as they typically take on household tions are increasing rapidly and spreading per year, if kerosene use is the baseline. jobs such as preparing food, and because quickly towards rural areas. Thus mobile Many households obtaining the project men have often been better paid for coverage seems rather unlikely to hinder SHSs will reduce or stop using kerosene, work outside the home than women Brighterlite’s expansion. In May 2015, Tel- a petroleum product, for lighting. 7-9% (ADB, 2014) thus having greater need for enor said it had signed up 6.4 million pay- of the kerosene is converted to almost mobile communication. However, because ing subscribers (Furberg, 2015), covering pure black carbon (BC), a highly potent women spend more time at home, lack of 50% of the country, despite launching in greenhouse gas, with a global warming household electricity access limits women’s late September 2014. Telenor targets 90% potential 3200 times that of CO2 over a access to mobile communication compared mobile coverage of Myanmar’s population 20-year horizon (Lam et al., 2012). Energy to men’s. by 2020 (its competitor Ooredoo, launch- payback for SHSs (when energy saved from ing in mid-2014 as well, targets 97% cov- reduced kerosene or diesel consumption The challenge erage by 2019 (GSMA, 2014)). offsets energy use in SHS manufacturing), Having received The Mobile for is achieved in 1-3 months (Alstone et al., Brighterlite is introducing a new product Development Utilities Innovation Fund 2014). Conservatively assuming a 4-year using new technology in a start-up grant, Brighterlite will be able to have an lifetime of the solar product, net energy business in Myanmar that involves imple- earlier start-up and much quicker scaling of savings of more than 6400 megajoules mentation of transparent business proc- the Myanmar operation. This, in turn, will (MJ) are achieved. esses and procedures, as well as third enable third party funding for a potential Reliable data sources are hard to come party contracts with independent outlets massive rollout. Brighterlite’s current share- by, given Myanmar’s past, but thousands and agents. This will be more complex, holders are high net worth individuals, of people die of indoor air pollution (IAP) and require more time and effort, than detailed conversations are ongoing with in Myanmar annually. In 2007, 14 700 in most other countries. Sales, marketing additional investors and the start-up has deaths in Myanmar were attributable to and after-sales service towards last-mile access to debt funding on very attractive solid fuel use (WHO, 2007). Knowing that customers is challenging. Hence, as in terms. Though this is a big challenge, lessons approximately one-sixth of household- other countries Brighterlite operates learnt from experiences in other countries generated BC comes from kerosene use, in, the organisation is partnering with as well as financing support suggests that and the rest from solid fuel use, it seems distributors and other entities that have a Brighterlite are equipped to face it. reasonable to assume that one- sixth of broad reach and in-depth local experience. IAP deaths are linked to particulate matter Solar products are actually fairly well References (PM) and carbon monoxide (CO) from use known in the Myanmar countryside, of kerosene lamps. Additional people may with solar panels being sold in most rural Asian Development Bank, 2014. suffer from injuries caused by kerosene towns. In some areas it seems reasonable Scoping Off-Grid Renewable Energy poisoning, burns and fires. If the highly to estimate a 25% market penetration. Opportunities in Myanmar: Report toxic lead and sulphuric acid in lead acid Nevertheless, staff, customers and regu- for the Government of Mynamar. batteries are not disposed of properly, they lators need more capacity building than Available from: www.energyforall.info/ wp-content/ may damage eyes, skin, respiratory systems elsewhere, particularly in the rural villages or nervous systems, and can contaminate Brighterlite will target. Myanmar ranks Alstone, P., Lai, P., Mills, E., the groundwater. Diesel generator sets as 177 out of 189 countries on the World Jacobson, A., 2014. High Life used by many Myanmar households for Bank’s Ease of Doing Business Ranking Cycle Efficacy Explains Fast Energy power generation are also big emitters of (World Bank, 2014b), ranks as 189 (last) Payback for Improved Off-Grid fine PM, CO, nitrogen oxide (NOx) and on the parameter ‘Starting a Business’ and Lighting Systems. Journal of Industrial Ecology. sulphur dioxide (SO2), as well as CO2 as 185 on ‘Enforcing Contracts’. and BC. Depending on their capacity, SHSs PAYG solar is completely new in My- can replace dry cell battery and kerosene anmar and even mobile telephony has a use, and even the use of diesel gen sets. short history. Phone access/ownership Data on Myanmar is limited and of is currently low amongst target users in www.HEDON.info/KYXB questionable quality, but based on Myanmar. According to GSMA (2014), * Author’s profile experiences from other countries, this Myanmar had 7.6 million mobile con- could save many lives, especially among nections and 6.6 million unique subscrib- * Full list of references women and children who spend more time ers (12.3% of the estimated population), closer to the pollution sources. mainly centred in Yangon, Mandalay and Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 9 VIEWPOINTS Viewpoints Interview with Akon, Co-Founder of Akon Lighting Africa
International music artist Akon, along with his two partners, joined the access to energy sector in 2014 by launching Akon Lighting Africa, an initiative to provide solar power to millions of people in Africa who do not have access to electricity. Recognising that a large proportion of Africa’s unelectrified population live in rural areas, the initiative is rolling out decentralised solar delivery models to meet this challenge. After meeting Akon at the recent UN Sustainable Energy for All Forum in New York, Karima Hirji from Boiling Point talks to Akon to find out what this initiative is really all about.
Your interest in energy access and your in a few weeks. It’s great to hear positive There is a general fatigue of aid for the new organisation, Akon Lighting Africa, feedback from local authorities and to see sake of aid and many people agree this is has gone viral! What inspired you to how happy people on the ground are. For not good enough. There clearly needs to work in this area? some of them, it is the first time they’ve be active private sector delivery, cheaper My partners, Thione Niang and Samba ever seen light at night. finance and policy support. What is Bathily, and I are Africans - and our first your own business model for supporting concern was to identify solutions to the The co-founders of your organisation lighting in Africa? challenges faced by our continent. Our all have roots in West Africa, a region Akon Lighting Africa and our partner experiences abroad made each of us realise that has one of the highest energy access and driving engine, Solektra International, how critical energy access is. Energy issues globally. How are you involved have developed a unique economic model is the first step towards development. in convincing governments to take more to ‘tick all the boxes’ of energy access People can be more productive, work proactive action in addressing this through quality equipment, financing and later at night, industrialise certain tasks challenge? employment. We have looked into all of and communicate more easily. Energy is The strategy is very simple - we want these issues in advance to develop a solid the first step towards economic growth, to be judged on results. Given this, we approach. education, access to technology and to have proposed pilot projects, financed at The first issue is the equipment quality unveiling Africa’s incredible potential to our own cost, to bring electricity (public and we address this by partnering with the world. lighting and kits for community buildings) world class suppliers from China and to areas selected by governments as part of Europe. The second issue is financing for Tell us about Akon Lighting Africa- its their electrification priority programmes. which we have adopted an innovative mission, priorities and examples of your These pilot projects have been very approach which relies on pre-financing. We work? successful and the truth is that we don’t started the project with a US$ 1 billion credit In a nutshell, we provide a concrete have to work to convince governments. line thanks to partnerships and agreements response to the energy crisis in Africa, People from other villages are spont- with leading banks and credit facilities while democratising access to energy, aneously calling for action in their offered to our suppliers. Through Solektra thanks to innovative, clean and accessible communities too. We have been invited to International, Akon Lighting Africa is able solar solutions including street lamps, participate in public tenders organised by to propose pre-financed clean energy that home-based solar kits, micro-generators, energy authorities. Since the start of the is immediately accessible. Credits can be lamps and recharge stations. Recently, project, in 2014, we have been welcomed refunded by governments who can pay Solektra International won a public tender by local heads of state and received through installments at the pace they choose. in Benin, consisting of the installation of positive responses from Governments in We also work to replicate this approach at a 500 solar street lamps, 2000 solar kits office. We have no intention of competing later stage at individual level, with a pay- as- (7W) and 200 larger kits (1000W) to with public policies but instead we support you-go a model for households. The third be used within communities where 124 national electrification programmes. Our issue is unemployment and to address this, localities are impacted. Three quarters goal is to help resolve the energy crisis our suppliers train locals who in turn train of the project has already been executed in Africa through efficient private-public other young people to install and maintain and the programme should be finalised partnerships. equipment. We’re also about to open a solar
10 VIEWPOINTS
academy in Bamako. The creation of a as possible the ‘ins and outs’ of our and tell us which localities should be training center focused on solar technologies initiative so that everyone understands electrified. At a later stage, when our is the next step. As we continue to deploy that the African energy challenge can pay-as-go model is up and running, solar solutions throughout Africa, we will be addressed now. During our tours in accountability is among the populations need more and more technical expertise. Africa, we try to share our experience as (as they will pay, even very small amounts, We want to develop skills for Africa and entrepreneurs with people, hoping that for electricity). Philanthropic initiatives reinforce African expertise. Africa can some will be inspired and will in their own are however important because they become the next global centre of excellence way contribute to building our continent. help raise funds to address this pressing on solar energy. We will continue to adopt We’re also very active on social media and challenge and raise awareness. Because of a ‘trade not aid’ approach and we are with journalists. the involvement of so many philanthropic increasingly convinced that this is the way With regards to the energy sector, my bodies, there is now a consensus on the forward. partners and I try to participate in prominent fact that darkness at night in Africa is not international gatherings and conferences. acceptable. If individuals want to support What have been your major accomplish- These events provide us with opportunites African development, there must be a ments and challenges thus far? to mobilise key stakeholders who can echo place for them and therefore a place for Since we we are now operating in 14 our efforts in an effective way. For example, non-profits and donors. African countries, we are moving very we were invited to speak at the UN General fast. Our long-term objective is to export Assembly. Support from the UN provides There is a large African diaspora that this initiative to all African countries. incredible access to decision-makers. The could play a large role in increasing We already have plans to launch projects SE4All forum recently recognised Akon clean energy access as well as influencing in 11 new countries by the end of 2016 Lighting Africa as a best case study. Dr changes in the local economy. Has Akon - South Africa, Angola, Mozambique, Kandeh Yumkellah, the former head of Lighting Africa been actively tapping Tanzania, Togo, Chad, Ivory Coast, SE4All, worked hand in hand with us, into these in the US and elsewhere? Democratic Republic of Congo, Rwanda, putting us in front of regulatory bodies, As we are building our Solektra Inter- Uganda, and Botswana. After 18 months energy experts and government advisors national team we are looking for the right of operations, we have installed solar with whom we shared lessons, ideas competencies in Africa and beyond so yes, lighting in over 480 localities including and discussed how to accelerate African members of the diaspora are also needed! 100 000 solar street lamps, 1200 solar electrification. We also support the African Africa is certainly the biggest economic mini-grids and 102 000 solar domestic energy leaders’ group and attended its opportunity for the century to come and kits. In addition, through this project an opening session in Abidjan, in the presence building a continent is an extraordinary estimated 5500 indirect jobs have been of all energy ministers of West Africa. adventure worth being part of. We want created. Like any entrepreneurs we had This group is illustrative that public and people to know that there is always a way to prove that our business model, which private decision makers have a platform to be part of this and to realise that they can is really unique in Africa, was viable in to exchange ideas, agree on plans and set use their experience abroad to support the order to entice partners from both private deadlines to deliver on energy projects. development of their country of origin in and public sectors. This is the reason why My advice to anyone willing to get many ways, just as we do. we have financed pilot projects ourselves. involved in the energy sector is to look I believe the hardest thing when starting for impact. We have to move from Do you have any plans to take your a business is to convince people that conversation to action. That is why initiative beyond Africa? you have the right idea - and there is we decided to focus first on rural areas We are focusing on Africa first but no exception for us! But the good thing where we knew we would quickly make a we’re definitely thinking about the next is that once people are on board, they difference to populations. steps. What I can tell you is that we have become your ambassadors. a global ambition too and a model that We heard you speak at the recent SE4All could be replicated in many regions of the As a public figure, how do you plan to 2 forum which was themed ‘Financing world. raise awareness of climate friendly energy Sustainable Energy for All’. What role access solutions for poverty alleviation do you think philanthropic foundations and what is your advice to other high could and should play in implementing profile individuals who may wish to energy access solutions? follow your example and get involved in Akon lighting Africa is definitely a www.HEDON.info/PYXB the sector too? for profit project. We think only such * Additional pictures This is an important aspect about the an approach can create accountability at project that we need to communicate. all levels. First, governments are made We need to explain to as many people accountable as they initiate public tenders Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 11 THEMEHELPLINE
Helpline Rapid expansion of distributed and decentralised energy systems is vital in achieving universal access to all. However, uncertainty about grid extension plans by the government, and reliable availability of information surrounding this, is a major stumbling block for developers in many developing nations. We, as a developer make assumptions that a particular village will not be electrified or connected to the national gird for the next 5-6 years to ensure our distributed power plants are sustainable and are able to reap the benefits. The current price at which we sell electricity as a developer is higher than what the government offers when they roll out electricity (as they subsidise the actual costs). Therefore reliable data with a clear timeline Author is crucial to ensure that developers like ourselves are able to operate Mohua Mukherjee and expand in areas that will not be extended with the national grid. Grid Senior Energy Specialist integration might be a solution but at present has its technical challenges World Bank Group as well as financial implications that would jeopardise our business models. 1818 H Street NW Washington DC, 20433, USA We have had experiences in the past where we had to cease operating our micro-grids as the national grid was extended a few months before [email protected] elections. Portable energy providers (like lantern or home lighting system providers) are able to unplug and move onto new areas whereas it is very challenging for micro-grid operators to scale down rapidly. This has been an issue for us while raising investments as well. Who should we reach out to in order to get a clear picture of extension plans? What approach should we take if the promises given by the government are broken? How could we convince our investors that we can mitigate this risk?
Expert response by Mohua Mukherjee
You have raised a very valid point which 2. Taken from page 15: National Renewable You may also like to know that multi- arises particularly in India as grid extension and Energy Plan (a focus on entrepreneurship laterals are working on a financial off-grid solutions are under the oversight of development, incubation for start-ups solution that will increase working capital two different ministries. Rural Electrification and for providing knowledge and capital debt availability for off-grid entrepreneurs Corporation (REC) under Ministry of Power support to existing or new ventures so that you are able to enter the ‘electricity (MOP) is in charge of extending the grid to based on renewable energy technologies); service delivery’ business rather than just unelectrified areas, whereas Ministry of New Renewable Electricity Investment Zones the ‘access to electricity’ business. The and Renewable Energy (MNRE) has various (The Ministry shall through RECI or any electricity service delivery business model schemes to work with developers such other identified agency, work with State means that your solution includes the as yourself who are interested in bringing Governments to identify and develop ability to offer very high energy efficient electricity access to off-grid areas. At present, renewable energy investment zones appliances to your customer, on a flexible MNRE has confirmed that neither MNRE nor to meet the goals under the National payment basis through mobile based the relevant state agencies are in a position to Renewable Development Plan. The pre-payment platforms. These can be on provide financial and commercial protection Ministry shall oversee and monitor ‘pay to use’ or ‘pay to own’ basis. The or guarantees to off-grid investors in case the the development and progress of these appliances can also possibly run on direct grid arrives before it was anticipated to arrive zones); Data management (the Ministry current (DC) (straight from the solar and before the developer has had a chance to shall designate a nodal agency (ies) for panels without an inverter) so that you recover costs. timely and disaggregated renewable are able to offer a higher value bundled A recent development is that the draft energy technology, performance and service than the grid. The grid only offers Renewable Energy Act has been issued for financial data collection and analysis, free flowing kWh whereas your customers public comments. There are three relevant including databases of existing and will be able to pay for working appliances. sections of the draft Act that may provide upcoming DRE projects). This model is currently under development relief of the kind you are seeking. 3. Taken from page 42: Access to grid and and will depend on the developer’s access 1. Common clauses number three: A par- forecasting grid connectivity (notwith- to suitable credit terms. However, once it ticular focus of this Act is Decentralised standing anything contained in this Act is in place you will no longer be competing Renewable Energy (DRE) and some or any other enactment, the operators with the grid, as you will have a superior facilitating and coordination related as- of the transmission and/or the distribu- service bundle relative to what is available pects with regard to grid connected re- tion system, as the case may be, shall be from the grid. newables to bring synergy and harmony obliged to connect the renewable energy in DRE development. generator to the system).
12 HELPLINETHEME
Author Padu Padmanaban Former Senior Energy Advisor USAID B402, Magnolia Apt Brigade Millennium JP Nagar Phase 7 Bangalore, 560078, India [email protected]
Expert response by Padu Padmanaban
Increasing access to energy has typically be sustainable and developed at scale, which has developed interconnection rules been the role of central and state planning, the role of private equity is critical. This for micro-grids. implemented by India’s State Electricity is not likely to take place since the above Regulate electricity feed-in tariff Boards and/or rural energy agencies such mentioned risk is a key barrier to such structures: The state governments should as the Rural Electrification Corporation. investments. One simple administrative agree to purchase electricity from all The solutions they offer are generally solution would be for the government to micro-grids upon grid arrival subject to centered on grid extension. This is fraught, state unequivocally that grid extension them meeting the requisite interconnection broadly speaking, with two issues. Firstly, to select remote regions will not take standards. A clearly defined and artic- for the financing models to be viable, place within a time-frame and invite ulated tariff structure is also essential to they require large capital and operating entrepreneurs to explore alternative DG minimise the revenue risk associated with subsidies to service the interest on loans models. Another simple way to reduce grid integration. Such a pricing structure as well as bridge the gap between cost the risk associated with grid arrival is should include the viability gap subsidy, of service and revenue realisation. This for the authorities to explicitly signal to whereby rural consumers pay the lower viability gap demonstrates that current developers that micro-grids will be allowed grid rate and the project developer is approaches to advance energy access to continue operations upon grid arrival. subsidised up to its generation costs. through grid extension cannot deliver These solutions are however subject to Subsidise interconnection costs: The cost-effective and reliable energy to rural political and social pressures that could government should extend its capital consumers, particularly those who are in easily overturn such an administrative subsidisation policies for DG renewable remote locations. Secondly, the extension decision, as has happened in the past. energy projects to include interconnection of the grid to remote areas could pose a The crux of the problem is that that DG equipment. Currently in many states this threat to entrepreneurs in the electricity is currently unregulated and, by extension, cost is borne by the developer, creating service business serving the same segment no uniform, consistent rules exist for additional financing risks . of the population that the authorities want micro-grid and other DG systems that A well defined grid integration policy to provide energy access to. feed back into the grid. There’s therefore a combines rules that govern technical The business threat to micro-grid pressing need to examine and implement standards; fair, transparent and attractive developers and operators resides in the measures that mitigate the risk associated tariff structures; and capital subsidsation fact that there is considerable ambiguity with micro-grid projects in villages where of interconnection equipment, that aim to surrounding the arrival of the central grid integration is a possibility within the reduce micro-grid project risks associated electricity grid to hitherto unserved areas lifetime of the project. To this end, the key with the arrival of the state grid. Such a in several remote, rural regions of the risk mitigation measures are: policy also has the benefit of creating country. While it’s possible for the central Establish interconnection rules and the ecosystem for development and and state governments to publish a list of technical standards: The State Electricity growth of renewable power sources in villages that are unelectrified and likely to Regulatory Commissions, in consultation the country. More specifically, for micro- remain so for the next ten years (a typical with the Central Electricity Authority, grid developers it provides the safeguards project timeframe for the spread of rural should introduce appropriate rules and necessary to continue operations after electrification), the approach is rife with regulations for paralleling, interconnecting the grid arrives and, equally important, uncertainty and political infeasibility. with and buying back electricity by the enables project financiers to value the There have been instances when micro- state grid. The current technical standards uninterrupted revenue stream even after grid operators have had to pull out of an for safety and reliability apply to large grid integration. area being served by their off-grid system independent producers rather than micro- because of the arrival of subsidised and grids. Given the various DG systems, there hence cheaper, central grid power. The is a need for interconnection standards only possible exception are distributed for different technologies and voltage www.HEDON.info/RYXB generation (DG) projects that are financed levels that ensure safe operation and * Authors’ profiles by risk-free capital by philanthropies or power quality as the grid expands into by corporate social responsibility funds. areas electrified with micro-grids. A good These are few in number and for DG to example is the Indian state of Chattisgarh Meet us @HEDON
Boiling Point. ISSUE ISSUE 67 67 — — 2015 2015 13 THEME
PEER REVIEWED
Modern design principles for investable village power projects
Keywords: Rural electrification; Efficient lighting; LED; CFL; Micro-hydro; Solar; Mini-grid
Author Stewart Alexander Craine Managing Director Village Infrastructure Angels The Hub Westminster First Floor, New Zealand House, 80 Haymarket London, SW1Y 4TE, UK
Picture 1: A kerosene lamp (Source unknown) The article revisits a 15-year-old Boiling Point article, which explored village electrification cost reductions that could be achieved by banning the use of incandescent bulbs and utilising compact fluorescent lamps (CFL) and light emitting diode (LED) lighting technologies. These so- called ‘expensive’ lamps reduce power generation from 100W per house to 5-30W per house, saving 30-50% in lighting costs per household but increasing the cost per kW. The article explores Nepal’s current subsidy policies, which still discriminate against efficient designs and non- reticulated power systems, such as solar home systems and centralised solar charging stations, as compared to mini-grid costs. The former (non- reticulated power systems) average US$ 25-50/W of LED lighting while mini-grids have a minimum cost of US$ 50 per house and reticulation wiring costs of US$ 1-2/m. As households in Nepal are often spaced 30 metres apart, it is concluded that non-reticulated designs should be used for up to 3W of LED lighting per house, while mini-grids are more cost- effective when demand exceeds 3W per house and house spacing does not exceed 15m/W of demand. Isolated solar systems are likely justified beyond 15m/W of house demand. Payback periods for mini-grids are estimated at 2-10 years with longer payback periods in South Asia than Africa or the Pacific. Investor tolerance for risk is limited to 1-3 years and hence dominates which technology can be applied. A staged approach to investing in village mini-grids, using an initial non-reticulated system to install lamps and house-wiring first, followed by an investment in reticulation later, would ‘build the grid backwards’ and help manage investors’ perceived risks. for rural Nepal’ (Craine et al., 2000) to compact fluorescent lamps (CFLs) of Introduction which focused on the primary demand 7-11W (that gave equivalent or more light of electricity in rural, off-grid projects output of 250-400 lumens (lm)) or to a 5 years ago the author of this paper in Nepal - lighting. The article explored new technology called white light emitting co-authored an article in Boiling Point the costs and benefits of switching from diode (LEDs) that were designed as 145 titled ‘Demand side management incandescent bulbs of 25-50 watts (W) 0.4W lamps (that gave lower light below 14 THEME
Picture 2: An LED lamp (Source unknown)
50lm). Two case studies of field imple- was changed to a 3kW project using 30W Improving new mini-grid mentation were described. The first used of CFLs, costing US$ 10 000-14 000, then designs using LEDs a pedal generator for human-sourced the cost per kW would rise from US$ power generation and the second a 2000/kW to US$ 3333-4667/kW. At the What might the next 15 years bring? In 200W pico-hydro reticulated mini-grid. current exchange rate of US$ 1=NR S88, 2000, the white LED lamp was only a It was concluded that an investment in the local equivalent is a rise from Rs 176 few years old. It was invented by Shuji ‘expensive’ but efficient lamps would 000/kW to more than Rs 293 333/kW. Nakamura (TIME, 2007) formerly of greatly reduce the investment required A challenge faced in 2000, which still Nichia Corporation, and had an efficiency in power generation, for example, four exists 15 years later, is that the subsidy level similar to incandescent bulbs (10 lamps that normally required 100W policy (AEPC, 2013) will not support lumens per watt (lm/W)). Since 2000, per household could be decreased to ‘overly expensive’ projects that exceed Rs white LED lamp efficiency has increased 30W per household if the designer and 195 000- 255 000/kW. This range relates to from 10lm/W to 100-130lm/W (Figure villagers used only CFLs, reducing costs how remote the project is and even lower 1) and decreased from US$ 10-20 per and improving lighting levels. After the limits apply for projects smaller than 10- lamp to US$ 1-2/W (IKEA, 2013). This article’s publication in 2000, such projects 100kW). Village Infrastructure built an trend has followed ‘Moore’s Law’ for were then built. efficient lighting 10kW project with the semiconductor technologies of a 50% Assuming the cost of power generation Lamjung Electricity Development Company price reduction every 18 months. Due to was reduced by 65-75% and the cost of (LEDCO) and achieved approximately the directional nature of LED lamp design, distributing the power reduced by 0-20%, 30% in savings by using 50W of power lumens can be directed downwards from but the cost of lamps quadrupled, the per household. In this project, 20kW of household ceilings and not wasted lighting overall reduction in the project capital projected demand dropped to 6-7kW of upper walls and ceilings. Thus, to achieve cost was estimated at 30-50%. Even actual demand and 3-4kW of spare capacity. the same light levels in the working area of when lamp replacement costs were inc- The project was refused a subsidy. a household room, as measured by a lux- luded, operating and maintenance costs metre, it is not necessary to replace a 25W would also reduce by 30-50% if funds Aid efficiency 250lm/W incandescent bulb with 2.5W to replace generation infrastructure 100lm/W LED - an even lower power LED was included. Given limited investment It is argued that a decade of lost of 1-1.5W can more efficiently deliver the and donor funding available, twice as opportunity has passed, where twice target light levels (Table 1). This efficient many households would gain access to as many households in Nepal (8-12% approach to lamp design can therefore electricity if micro-hydro mini-grids in of the population) could have accessed reduce peak evening power demand in a Nepal banned the use of incandescent electricity if mature energy efficient lighting village from 100W per house to just 5W lamps and only used CFLs. This has technologies had been mandated for mini- per house, far lower than 25-30W per partially occurred given that recent field grid design, as they were mandated in more house of CFLs. visits suggest the mix of lamps in micro- obvious systems designs like solar home To illustrate this we can use a 10kW hydro systems in Nepal is now 50% CFLs systems (SHSs). Energy efficient designs example for 100 households where each and 50% incandescent. However, while will always have higher costs per kW, and household has four 25W bulbs, costing white LED lamps have dominated solar policy-makers from Denmark and Nepal US$ 20 000 (US$ 12 000 for generation, for five years already, they are still almost could significantly increase aid efficiency US$ 7000 for distribution and US$ 1000 non-existent in micro-hydro systems. if this relatively simple design principle for house wiring and lamps). This could was properly illustrated to them. One be redesigned as a 1kW project that costs ‘Expensive’ efficient designs argument against promoting designs that US$ 7000-9000, assuming US$ 1000- reduce power generation is that there is a 2000 for power generation, US$ 3000- Omitted from the 2000 Boiling Point reduction in daytime power generation. If 5000 for distribution (as thinner wires article but included in a report to the peak/maximum load in a village mini- can be used) US$ 800 for wiring and four DANIDA (the Danish aid agency) and grid was from daytime demand, this would 2W LEDs at US$ 4 each (US$ 1600). This Nepal’s Alternative Energy Promotion be valid, however a typical mini-grid in is cheaper than the 30W per household Centre (AEPC) (who subsidised almost all Nepal has a maximum daytime demand design that costs US$ 10 000 - 14 000 the mini-grid development in Nepal) was for electricity at only 25-50% of the when using CFLs, but due to the 90% a conclusion that cost per kilowatt (kW) evening peak load when the lights come on. reduction in power generation, daytime would increase dramatically for projects With reduced power generation available, energy needs would now be the new peak that only use efficient lamps, while the there would be a need to investigate and load, or would have to be removed from cost per household would drop. If a 10kW promote other energy efficient end-uses, the system. project using 100W of bulbs for 100 such as soft-starters for electric motors to LED lamps are therefore best used households, costing around US$ 20 000, reduce surge currents during startup. for lighting-only projects where there is
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Figure 1: Past LED price trends
2010 2011 2012 2013 2014 2015 2016 2017 2018 Distribution of power via a reticulated mini-grid in our 1kW mill example costs US$ 30-50 per household, which at Lumen 1 1.35 1.82 2.46 3.32 4.48 6.05 8.17 11.03 US$ 1-2/m will give 15-50m of outdoor, $ 13 10.4 8.32 6.66 5.32 4.26 3.41 2.73 2.18 fully installed wiring per house. Such a minimum reticulation cost would be $/klm 13 7.7 4.57 2.71 1.6 0.95 0.56 0.33 0.2 applicable to all mini-grids, whether Table 1: Future LED price trends powered from hydro, solar, diesel or other technologies. Once the cost of very little daytime demand for electricity. stored this energy for later use and no power generation is included (US$ 10-20 Electrifying improved water mills reticulated grid was used. Similarly, solar per house or US$ 2.50-5 per lamp) and (‘ghattas’) is an excellent example of systems use batteries to store energy the cost of internal wiring and lamps is an application where daytime energy is for later use, and in the last 15 years, included (US$ 24 per house or US$ 6 per provided through non-electric mechanical SHSs have been revolutionised by the lamp), a minimum investment for LED energy at the turbine shaft and an electric use of white LED lamps. In 2000, the mini-grids can be established: US$ 40- distribution system can be added to a smallest solar system in the market was 80 per house, and higher for non-hydro relatively small but socially integrated approximately a 10-12 watt peak (Wp) generation technologies, particularly water mill. Given that the civil works panel operating a single 6W fluorescent those that also need battery storage like have already been built, the cost of lamp, and this cost approximately US$ solar/wind mini-grids. LED ‘ghattas’ is likely to be very low. 100-200. Solar panel prices were around One example of a non-hydro, battery- Pico-hydro systems of 1-5kW also lend US$ 4/W. Today, they have reduced to US$ free mini-grid system is Husk Power’s themselves to use of LEDs. 1-2/W and LED lamps allow the design of rice husk gasifier grids of 32kW which 0.5-5W solar systems. This has resulted run for 6 hours per day and cost around Improving existing mini-grids in hundreds of designs of US$ 10- 100 US$ 32 000 (Halabol Voices, 2013). With via LED relamping 1-lamp to 4-lamp solar kits that use 0.2- 30W per household of power, 500-1000 1.5W LED lamps, increasing affordability. households could be connected, giving a Many micro-hydro projects around Nepal The village power designer is now faced capital cost investment of US$ 32-64 per also suffer over-demand for electricity in with a choice - is there any point to build household. 7-11W CFLs are common in the evening. LED and CFL lamps can be ‘expensive’ reticulated mini-grids when Husk Power’s systems, so an equivalent used to reduce peak lighting demand by ‘cheap’ solar lamps exist? solar system would use three 2-3W LEDs 50-80%, freeing up peak power to add To answer this, consider a 1kW or 6-9W of lighting and cost over US$ more appliances to existing households, improved water mill in Nepal for 100 200 per household. In a solar mini-grid or to extend the distribution system to households compared to 100 solar example, Mera Goa Power has installed nearby unelectrified villages and connect systems. To provide similar light from costs for three 1W LED lamps of US$ 30- additional households. Both activities four 2W LEDs per house, a 15Wp panel 50 per household. This is therefore similar would generate additional revenue for would be required, and a system this size to the 1kW water mill but for fewer hours the micro-hydro mini-grid, and allow would cost between US$ 60-100 ex-China of operation. entrepreneurial owners to lift the value (Made In China, 2013) to US$ 200-250 Households will generally pay US$ of electricity from approximately US$ for government-approved kits in India 2-10 per month for three lamps and 0.01/W per month for a 25W bulb that (Alibaba, 2013) or US$ 400-450 in other phone charging services. This varies costs Rs 25 per month, to Rs 3-10/W per countries (Sulit Philippines, 2013). This considerably depending on the continent month for 7W CFLs or 2W LED bulbs. would cost US$ 20 000- 40 000 for 100 of implementation. This gives payback The higher cost of power will encourage households, 2-4 times higher than the periods of 2-4 years for modern designs the use of energy efficient devices without US$ 7000-9000 electrified water mill. costing US$ 50-100 per house and 8-10 resulting in a higher cost per month for Additionally, solar would only provide years for inefficient designs costing US$ households. electricity for 4-6 hours per day instead 200-400 per house, while standalone of 12-24 hours per day from the mill. At solar systems can provide less than 1W ‘Expensive’ reticulated US$ 200-400 for 8W of LED lighting, of lighting service to a house for less than mini-grids versus ‘cheap’ the cost of solar is around US$ 25-50/W US$ 50 per household. If an investor or of lighting (not Wp of solar). This scales entrepreneur is not willing to invest at solar lamps down to smaller kits too, such as the least US$ 50-120 per house and wait 1.5- World Bank approved Barefoot Power 3 years to be repaid, it is recommended In our first case study in 2000, a pedal- Firefly 1.5Wp 0.7W LED desklamp for that they avoid the use of reticulated grid powered generator was used, batteries US$ 28.50 (Kopernik, 2013). designs and concentrate on non-reticulated
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solar systems (using either solar panels at Policy and donor recommendations Author profile each house or centralised solar generation at a charging station). Furthermore, if a The Nepal policy has taken one step in Stewart Craine is an engineer house requires three 1W lamps and phone the right direction and added a subsidy who has spent two years in Nepal charging which would costs US$ 75-150 per household approach to its subsidy per designing and building micro-hydros, via a SHS, then a mini-grid can only be kW approach. It is recommended that the four years in Australia designing large wind farms, six years founding considered if the length of wire to connect subsidy per kW approach be eliminated, and growing Barefoot Power (a that house is less than 50m (or 100m to and a subsidy per house or business con- solar LED lighting company that has reach two households and so on). nection become the main driver, allowing reached over two million people, engineers to design efficiently. With sim- raised US$ 10 million in grants and Conclusions and ple changes in the next year or two, aid investment from dozens of small and recommendations can reach 50-100% more households and large investors, and currently aims universal access to electricity in Nepal can to mobilise 1-5 year loans through A modern mini-grid design philosophy be within reach by 2025. Solar and LED an not-for-profit investment group, prices are continuing to drop and there- Village Infrastructure Angels). Based on the above analysis, it is gener- fore policymakers need to adapt faster. ally recommended that a village power Acknowledgements designer/planner should use non-reticulat- References ed solar for household power demand of The author acknowledges a project smaller than 3W per house, and Alibaba, 2013. Other Lights and contributors to the experiences mini-grids for a project larger than 3W Lighting Products - TATA JUGNU summarised in this paper, including per house (if the distance to the house is home lighting system. Available from: VIA co-founders Kim Chen and Lucy Symons, VIA investors, Barefoot less than 15m of wiring/W of demand). A www.alibaba.com/product-free Power co-founder Harry Andrews, corollary of this design guide is that SHSs Alternate Energy Promotion Centre, staff, investors and several other are justified for households greater than 2013. Subsidy Policy for Renewable supporters. 15m/W of demand to the edge of the grid Energy, 2069 BS February 2013. or the nearest neighbour. For example, a Available from: www.apec.gov.np/ house 150m away may be justified to have Irvine-Halliday, D., Craine, S., 2000. a 10Wp solar system rather than investing Demand side management for rural in 150m of reticulation wiring. Nepal. Boiling Point, Issue 45, pp. 14-16. Investor risk limitations drive Frontier India, 2013. Philips launches system design exorbitantly priced LED bulb in India. Available from: http://frontierindia. The article’s analysis also suggests that net/ power systems may evolve over time, from a non-reticulated entry point based on Halabol Voices, 2013. Power by Husk. Available from: http://voices. battery-powered lamps and mostly solar/ halabol.com/ grid recharging, to hydro/biomass/diesel/ biofuel reticulated mini-grids. As power IKEA, 2013. IKEA Living Room demand grows from households, initial Lighting. Available from: www.ikea. investments are successfully recovered com/ and investor risk tolerances grow from Kopernik, 2013. Kopernik 5-18 month payback periods to 2-5 year Technology Marketplace - Barefoot payback periods. The article describes this Power Firefly Mobile Lamp. Available evolutionary approach to power system from: http://kopernik.info/ design as ‘reversed rural electrification’ Made In China, 2013. Product wherein lamps are installed first, not last, Directory - 15W portable solar then house wiring is put in place and systems. Available from:www.made- www.HEDON.info/MYXB finally reticulation wiring is installed later in-china.com/ as the ‘grid is built backwards’. The key TIME Magazine, 2013. Shuji * Additional pictures limitation and design factor is no longer Nakamura. Available from: www. technology but investor risk tolerance. time.com/ Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 17 THEME
PEER REVIEWED
Aggregating micro-grid and nano-grid projects to scale off-grid solar: A practitioner’s perspective
Keywords: Off-grid; Solar; Micro-grid; Mini-grid; Nano-grid; Pico-grid, Productive end-use; Project aggregation
Authors Sandeep Giri CEO Gham Power
Anjal Niraula Micro-grid Systems Manager Gham Power Gham Power Nepal Private Limited House #292 Chundevi Road, Maharajgunj-3 Kathmandu, Nepal
Picture 1: Micro-grid PV array at Harkapur (Source: Gham Power) Despite solar being an ideal solution for energy access in off-grid communities, the common deployment models of solar lanterns and small home systems have not quite achieved the type of scale seen in the grid-tied sector. Mini-grids and micro-grids are promising deployment models for scale as they serve a much higher number of customers per installation. Beginning in 2013, Gham Power initiated a number of pilot projects in Nepal to test the feasibility of this model. These experiences led to a focus on two specific configurations– a micro-grid model to power entire villages or communities of 100 or more households each, with majority of the load coming from anchor tenants; and a nano-grid model for communities of 20-30 households in a cluster, powering only predefined direct current (DC) loads. These projcts have large environmental gains. The project’s three micro-grids, for example, replaces 4546KL of potential diesel and kerosene usage, curbing 41 tons of CO2 emissions per year. Since individual micro-grid sizes are still relatively small, project aggregation is a must in order to bring institutional investment to these projects. To achieve this, the authors call for the provision of open standards-based tools and templates from off-grid project development.
Introduction scalable business models (IFC, 2012) and per installation is relatively small (1-5W policies to support such innovations and for solar lanterns, 20-40W for SHS), and .3 billion people in the world live financing (WEF, 2014). they also incur higher operations and without any access to electricity, mostly Distributed off-grid solar is an effective maintenance (O&M) costs. 1in rural areas (IEA, 2011). Another solution for energy access since solar Upfront solar technology costs are still 1 billion suffer from unreliable electricity installs quickly and doesn’t require the high. While most policy makers attempt networks and long daily blackouts, and installation of major transmission lines. to address this problem with capital population growth is outpacing all However, to scale solar with solar home subsidies, and some have reported big electrification efforts due to insufficient systems (SHS) and solar lanterns is successes (Khandker et al., 2014), the costs levels of financing (Bhattacharya, 2013), difficult since the amount of watts (W) associated with O&M have not been as well lack of off-grid innovations to develop deployed (and the electricity generated) documented. Components like batteries
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Picture 2: Micro-grid PV array at Chyasmitar (Source: Gham Power)
Picture 3: Micro-grid PV Array at Harkapur (Source: Gham Power)
or inverters are rarely replaced in case household energy requirements makes it emerged as an effective solution to secure of malfunction. Even when components hard to achieve scale. For this, projects energy supply to the people in rural areas, function well throughout their design either have to include local businesses but also as a medium to diversify the energy life, capital subsidies are not awarded for (in their customer base) which have mix of the country and make the electricity replacement, and most SHS users revert to productive end-use of electricity (rice mills, network more resilient. Without access to using kerosene or battery based flashlights dairy, water pumping, clinics) or serve modern energy services, people in rural areas (Palit et al., 2011). a large number of households within a of Nepal generally resort to using kerosene Solar micro-grid models attempt to ad- relatively small geographic area, and more and diesel generators for electricity. These dress these issues with a design that serves importantly, deploy an extremely large carbon based fuels are non-renewable and a large number of households and busi- number of projects with similar profiles. also emit fumes, causing millions of deaths nesses within a community with a single For this, standardisation around system every year all over the world (Practical centralised solar PV system, which scales design is key. Historically, micro-grids have Action, 2014). Furthermore, these sub- more easily to serve growing energy needs. adopted a wide variety of designs since no stitutes can be 1000 times more expensive A transmission line provides electrical single village or hamlet is exactly the same than CFL for comparative light (Berkeley hookups to individual customers and also (ARE, 2011; ESMAP, 2000). However, this Energy Labs, 2014). The climate change provides options for smart prepaid meters results in long project development time impacts of kerosene lamps through black for more efficient billing and payment. and high due diligence costs. When project carbon (BC) emissions have also been well Furthermore, by incorporating more day design, revenue and profitability vary so documented (Lam et al., 2012). Therefore, time energy loads from commercial ac- much with each project, it imposes a huge there is an enormous opportunity to tivities, the system has a more balanced risk on the investors and the developers. address these challenges through the daytime load profile, which makes it more Standardised designs and better-defined adoption of decentralised generation with efficient. Customers also prefer a pay-as- risk profiles allow project development to micro-grids. you-go (PAYG) type model provided by become more streamlined with more tools, Gham Power has been operating micro-grids which enables payment for templates and best practice adoption, as in Nepal in 2010 as a solar company electricity without the worry of equipment well as enabling investors to better under- deploying both off-grid and hybrid solar ownership. stand and quantify the project risks. PV systems. A micro-grid system was To explore this, Gham Power deployed designed for rural communities that Achieving scale by project a number of micro-grid pilots in Nepal to have potential for commercial activity aggregation evaluate different system sizes, technology and local income generation. These designs, ownership models and financing micro-grids provide centralised power The telecommunication industry has dem- models. This helped categorise the different for local ‘anchor’ businesses to power onstrated how to attract private invest- types of micro-grids and identify potential appliances for productive end-use. Once ment into rural markets by identifying paths to scale. the significant amount of anchor load is scalable and replicable business models. dertermined, the system is then extended. Between 2008-2014, telecom operators Consideration of micro-grid This way, Gham Power achieves individual have invested over US$ 45 billion to in- models in Nepal system size large enough to sustain a crease capacity and extend the coverage in dedicated local team to own and operate sub-Saharan Africa alone (GSMA, 2014). Nepal generates most of its electricity the micro-grid as an independent business In their scenario for universal electric- through hydropower. Every year, the threat or cooperative. The projects require local ity access by 2030, the International En- posed by climate change becomes more community investors to invest at least ergy Agency (IEA) estimates that 60% of apparent with frequent droughts and floods, 10% of the system installation cost and households gaining electricity access will which greatly curtails the hydropower raise the remaining capital through a do so via off-grid solutions – primarily re- generation capacity. Still, seven million mix of Gham Power investment, outside lying on solar (IEA, 2014). In fact, some people (24% of the population) in Nepal equity partners, debt and any applicable studies value the market to grow nine- live without any access to electricity, mostly subsidy or grants. fold to US$ 150 million by 2018 (Dalberg in rural areas using kerosene lamps for Most industry literature uses inter- Group, 2015). lighting, with costs as high as US$ 5/kWh changingly the terms ‘mini-grids’, ‘micro- This is a great opportunity for off-grid or at least US$ 10/month. The remaining grids, ‘pico-grids’ and ‘nano-grids’ to project developers. To access commercial 21 million face 16 or more hours of daily describe these systems. For consistency, the project financing, developers must demon- blackouts due to insufficient generation article uses the classification as detailed in strate scale (in terms of system size) as from the grid (around 500mW deficit). Table 1. This artcile contains an overview well as sustainability (adequate cash flow While demand in the urban areas is of Gham Power’s micro-grid and nano- with acceptable and quantified risks). In fast outstripping the supply, decentralised grid pilots and the key takeaways moving rural areas, just providing electricity for generation via micro-grids has not only forward.
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pico-grid nano-grid micro-grid mini-grid Type DC DC AC or DC AC Typical system size 200-300Wp 300Wp – 1kWp 10-50kWp 50kWp All nano-grid usage and Base package of lights commercial productive Strictly LED lights and and mobile charger with Same as micro-grid but Uses end-use (e.g. rice mill, mobile chargers optional upgrade to DC greater scale dairy, water pump, clinic, fan, TV or computer etc) ~100 households + 3-5 200 or more households Clients served Under 30 households Under 30 households anchor loads representing with anchor loads majority of the load
Table 1: Classification of micro-grid terms
Harkapur Kaduwa Chyasmitar Total Households willing to 42 31 10 83 connect to micro-grid Businesses willing to 16 3 6 25 connect to micro-grid Energy demand per day 30kwh 53kwh 13kwh 93kwh Maximum draw of 6kw 6kw 6kw 18kw simultaneous power Potential to integrate with No No Yes Yes utility grid Table 2: Individual micro-grid site requirements
Harkapur Kaduwa Chyasmitar Total PV array 9kW 21kW 5kW 35kW Battery bank 48kWh 144kWh 48kWh 240kWh Diesel generator 10kVA 53kwh 13kwh 93kwh (runs daily 5-7 pm during none none 10kVA 18kw two months in monsoon) (runs daily 5-7 pm during No No Yes Yes to months in monsoon) Inverter 7kW 7kW 7kW 21kW Transmission line 4km 3km 1km 8km Table 3: Individual micro-grid system design
Micro-grid deployment report about US$ 3/kWh in costs. Most of the so a diesel generator is used during these community is engaged in sustenance two hours in monsoon season, as it is With assistance from the Asian Develop- farming and there is a growing number of much more cost effective than oversizing ment Bank (ADB) and DOEN Foundation, small businesses like tea shops, eateries and the batteries and the PV capacity. The three off-grid rural villages were selected lodges as well as mill and auto workshop design also includes using smart prepaid for the micro-grid pilot, approximately services. The overall existing and potential meters to manage automated billing and 150km east of Kathmandu (capital of electricity demand and willingness to pay payment collection. To manage these met- Nepal). The nearest connection to the for electricity is illustrated in Table 2. ers and for remote monitoring, the national electricity grid is about 55km system includes setting up a basic wireless over a mountainous terrain, making it System technical design internet connection at the sites. highly unlikely that the grid will reach these villages within the next 5-10 years. To meet the community energy needs, System budget, financing structure and However, these are growing communities the project proposed three solar micro- return on investment with business activities on the rise with grids with a total installed power of 35kW, approximately 300 households and 70 generating about 34mWh of electricity The total installation cost of the project small businesses. annually. This design is presented in Table 3. is an estimated US$ 239 277 with an The solar panels are ground-mounted and additional US$ 30 025 every five years Site requirements a separate power room is constructed to to replace the battery bank. About safely house the battery bank and other 40% of the total budget was used for Three site surveys indicated that the control units. A local support centre with transmission lines, prepaid meters and communities surveyed currently use kero- full-time trained staff owns the O&M of setting up wireless internet. Although sene, firewood, small solar home systems the three sites. The Harkapur site does these features are not typically associated (SHSs) (typically 20-40W) and some diesel not receive adequate sun during two with an off-grid solar installation, they generators for services like welding. The months of monsoon season to support are important for rural micro-grid energy demand is however not being met its peak load from 5-7 pm (mostly operations. The funding sources for the with these options despite people paying households and local eateries and lodges) project were as follows:
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Picture 4: Gham Power team installing micro-grid PV array in Chyasmitar (Source: Gham Power)
Local community investors: US$ 35 000 size increased to enable system upgrade To do this, both micro-grid and Project developer: US$ 32 210 options to add a DC fan or TV. nano-grid project structures needs to Bank loan: US$ 8653 These projects can be funded entirely be standardised in terms of technology Asian Development Bank grant: US$ 100 000 from crowdfunding sites such as Kiva design, financing structure and the O&M DOEN Foundation grant: US$ 73 067 and achieve payback within 2-3 years. structure, with the ultimate goal of getting Alternately, independent investors can the cost of energy at or below the costs With regards to earnings, the total projected fund the projects in all equity, achieving for kerosene or diesel. Gham Power annual revenue from all three micro-grid sites payback within 2-3 years, with IRR in the believes an industry-led approach in the in the first year was US$ 23 358 which will mid 20s over a 10-year term. structure of an open source project may escalate by 5% each year. Each household be the most efficient way to achieve this pays a flat fee of US$ 4-6 per month and Micro-grid versus nano-grid goal. To that end, we invite other project most businesses pay anywhere between US$ developers, EPC’s and investors to provide 10-80 per month. Furthermore, Nepal’s The services a nano-grid can provide is feedback on the micro-grid and nano-grid leading private telecom carrier NCell is limited compared to a micro-grid and being deployment models used by Gham Power installing two telecom towers nearby these DC means limited scale. Nano-grids also and to collaborate with us on developing sites as another anchor client powered by only power DC equipment which cannot tools and templates to standardise the the micro-grids. The GSMA Mobile for be easily connected to the national grid in development of these types of projects. Development programme is providing an the future. However, from an operational additional grant for this project extension. perspective, nano-grids have a shorter References Based on this structure, the project will sales and deployment cycle which makes provide a 10% internal rate of return (IRR) them more desirable for small businesses ARE, 2011. Hybrid Mini-grids for to the equity investors over a 10 year term to develop, own and operate. Funding Rural Electrification: Lessons Learnt. (a modest increase over the average of 6% nano-grids is also faster given the greater Alliance of Rural Electrification, interest earned on a savings account). number of potential capital sources. In USAID: Brussels. Overall these three micro-grids will order to serve households, nano-grids are Bhattacharya, S., 2013. Financing power 25 businesses and 83 households definitely much more efficient and scalable energy access and off-grid in three villages. This impacts a total of compared to SHS and lanterns. electrification: A review of status, 540 lives and creates 125 jobs in these options and challenges. Renewable communities, while replacing 4546 kL of Conclusion and Sustainable Energy Reviews, potential diesel and kerosene usage and Volume 20, p. 462–472. curbing 41 tons of CO2 emissions per year. Building on solar lanterns and SHS, Bulusar, S. et al., 2014. 50 The businesses will provide some sorely micro-grids provide a more scalable way Breakthroughs: Critical scientific and missing basic services in these communities. to deploy solar in rural communities. technological advancement needed The dairy chilling centre will substantially Micro-grids power a larger pool of for sustainable global development. reduce a lot of milk wastage and encourage customers with each installation, with Institute for Globally Transformative farmers to increase production. The rice larger installation sizes since it powers Technologies, Lawrence Berkeley National Lab: Berkeley. mills and water pumps will improve commercial activities in addition to basic local agro-processing capabilities and help household loads, thus reducing or even Dalberg Group, 2015. The Business increase income. Futhermore, access to the eliminating the use of kerosene and diesel Case for Off-Grid Enery in India. The internet and telecom services will enable in these communities. The most important Climate Group. other information and communications factor in scaling deployment is the ESMAP, 2000. Mini-grid design technology (ICT) based commercial services. institutional investment needed to finance manual. UNDP/World Bank: micro-grid projects. The investment Washington DC. Nano-grid deployment report threshold for most institutional investors (usually US$ 10 million) is significantly For the nano-grid pilot, Gham Power higher than the size of individual micro- created a basic household package of three grid projects. However, if we aggregate LED lightbulbs and one mobile charger multiple projects into a larger pool as a that runs for seven hours a day with a single fund, then the investment threshold www.HEDON.info/NYXB monthly tariff of US$ 3 per household can be met. Micro-grids represent a better (compared to US$ 10 per month using investment option since the investment is * Full list of references kerosene lamps). The first pilot powered deployed into multiple small projects and 20 households with a 200W system, thus reduces risk. and in subsequent pilots, the system Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 21 VIEWPOINTS Viewpoints Interview with Jeff Prins, Programme Manager at the DOEN Foundation
Jeff Prins is the Programme Manager at the Dutch organisation- the DOEN Foundation. The DOEN Foundation believes that a green, socially-inclusive and creative society is possible because the world is full of committed entrepreneurs with sustainable, cultural and socially-engaged initiatives. The Foundation supports people who have the courage to take risks and put their often pioneering ideas into practice by providing financial support and connecting them with like-minded entrepreneurs in the sector. The DOEN Foundation also works to combat climate change by focusing on reducing CO2 emissions through the financing of initiatives in the Netherlands as well as initiatives focused on access to sustainable energy in India and East Africa. Boiling Point editors talk to Jeff about the Foundation’s work in decentralised renewable energy and the role of philanthropy in providing much needed finance to energy access projects worldwide.
Can you tell us a bit about the DOEN Our readers may be interested to know in the field of renewable energy access, Foundation and your role within the your regional focus and what the something we have been active with Foundation? Foundation’s priorities and goals are in since 2005. Our first investments were DOEN is a non-profit Foundation, this area? made with pioneers such as Solar.Now! set up in 1991 by the Dutch Postcode Our priority is renewable energy (formerly Rural Energy Foundation) and Lottery, to invest in social, cultural and access, serving the underserved, sometimes Barefoot Power. environmental entrepreneurs as well as a referred to as the ‘base of the pyramid’, variety of charity organisations who are mainly by means of entrepreneurship. There’s been a new wave of conversation unable to directly receive funding from Our geographical focus is on India and in the sector about moving away from the the Lottery. My role at the Foundation East Africa. top-down ‘recipients of aid’ model (where is to formulate policy on what we should for example LED lights are given away support; to select and/or analyse the We teamed up with The Climate Group for free) towards a more ‘business model’ actual inititaives we want to fund; to put to produce this issue of Boiling Point and that engages commercial local partners forward a decision request to our Board we found out that you are a member of the (where LED lights would be developed, for (possible) approval of those projects; advisory board on The Climate Groups’ marketed and sold). What models do the and to track progress of those initiatives Bijli project. Can you tell us about your DOEN Foundation support and why? we fund. role in the project and explain what it is We very much support the business about the project that attracted you to it model through our work with existing Can you explain, with some examples of (both personally and as a Foundation)? or start-up local entrepreneurs and projects and partners, what the DOEN I’ve known The Climate Group (TCG) focusing on what the ‘underserved’ need. Foundation is currently doing/supporting since 2005, as at that time the DOEN For example, Rural Energy Foundation in the off-grid clean energy sector? Foundation directly funded TCG. Later (now known as Solar.Now!) started on We work closely with and fund a TCG was able to receive direct funding the premises that donor and/or give- variety of organisations or companies from the Dutch Postcode Lottery, starting away projects and tenders were ruining in India and East Africa. These currently in 2008. As such, I have followed TCG the market. What would happen, they include SELCO Incubation Centre, SELCO since their start in 2004 and I have always asked, if no distribution, after-sales and Foundation, Simpa Networks, Frontier appreciated their focus on states/regions service existed, particularly relevant if Markets, ONergy, Gham Power, New and businesses, both focused on creating customers needed repairs? So from the Ventures India (part of World Resource a coalition of the willing. They have start, given our experience with Rural Institute), Gray Ghost Social Venture promoted action on climate change and Energy Foundation, we were convinced Fund, MKopa, FRES, SunTransfer, ORB demanded the need for a ‘low carbon’ that it would be better to build capacity Energy, BBOXX (through our partner economy which creates of course new and treat ‘solar’ as a business, not as a Bamboo Finance), Sun Funder and economic winners. So I simply was able to charity, with proper distribution and Inyenyeri, amongst others. reconnect with TCG and I gladly offered after-sales service. And we’ve followed our DOEN experience and knowledge this approach from the start. We’ve
22 VIEWPOINTS
always been wary of ‘product-push’ in funding). There is hence a lot of talk about that the energy access sector faces cases where proper after-care was lacking. ‘blending’ capital, from various sources regarding climate change? In fact, when visiting an MKopa customer including Foundations and governments. The biggest challenge is that the issue in Kenya, I was surprised to actually see Typically basic services, such as energy, is not considered a main priority. We are the remnants of this old give-away model. water and sanitation, have been met or not in a ‘all hands on deck’ situation. The The customer, a woman in this case, was organised by governmental interventions, issue of climate change has always been of course happy with the new services of but there is neither the money nor the seen as ‘generational’ – something for later MKopa, but at one point she pulled out a innovation to do this in ways we are now generations – although I am hopeful that solar panel from under her sofa to ask if seeing in the access to energy sector. that is changing. Climate change is also we might help her install this panel that often viewed as ‘geographical’ – something was given to her a few years before! As a Foundation, what do you think the caused by rich countries and poorer regions role is, and furthermore should be, of need to catch up. So the energy access Scaling up has been one of the primary philanthropy towards off-grid energy, sector has to deal with this lack of action struggles in off-grid clean energy uptake. and how do you think this is changing, and lack of ‘sense of urgency’. Fortunately From your work, do you have good if at all? much can be done despite this and it simply examples where scaling up has happened As a Foundation we need to take risks makes sense to offer clean energy at a better or can take place? and invest in early stage entrepreneurs price than existing ‘dirty’ alternatives, such SELCO probably offers the best trying to move the market towards re- as kerosene, which costs more and lights example of scale. They have reached some newable energy access. That is not hap- poorly. 220 000 households. It has not been easy, pening enough, unfortunately, but there but their holistic approach to identify needs are some funders who we expect to do What benefits and opportunities could first and work from there – identifying the positive work in this space such as Good companies and societies find when possible technical, financial and social Energies, Rianta Capital, Beyond Capital they are more concerned about climate barriers in reaching the ‘underserved’ has Fund, Shell Foundation and Rockefeller change? been truly inspiring. I think their mantra Foundation to name a few. Climate change creates the right ‘frame’ makes sense: to scale through replication. to act in. If the focus of an organisation Further, and related, you see scale with Boiling Point is primarily a journal has ‘the poorest in mind’ and if you go companies using a ‘pay as you go’ model, by practitioners for practitioners and for the ‘impact jackpot’, then in the words such as Simpa Networks and MKopa, many of our readers are locally based of Kevin Starr from Mulago Foundation, both of which have been inspired by and and engaging in various off-grid energy other benefits will simply follow, like a ‘low have learnt from SELCO. In fact, I think access programmes in their own homes carbon economy’ or benefits that actually MKopa has now reached over 200 000 and communities. As a Foundation that also tackle climate change in the end. households in Kenya, scaling in a new supports local projects, what is your way and learning from SELCO. I imagine, advice to our readers in how to target the that solving the financial barrier is key to right sort of financial support and then scaling up and being able serve those who successfully obtain it? Learn more about the DOEN Foundation do not have energy access. My advice would be to connect with by visiting www.doen.nl/sustainableenenergy leaders in the sector, like SELCO, and Contact the DOEN Foundation: The DOEN Foundation spoke at the recent try to learn, at least initially, from them. The DOEN Foundation, SE4All 2 Forum in New York which was We don’t have local offices and therefore Postbus 75621, 1070 AP Amsterdam themed ‘Financing Sustainable Energy a local presence, so we often try to work Phone: (+3120) 573 7333 for All’. In your opinion, what are some through partners like SELCO or New Fax: (+3120) 573 7370 of the takeaways from this forum in Ventures in India, to bridge the knowledge E-mail: [email protected] terms of current developments and major gap we often have. The UN Foundation challenges practitioners face in the sector? or other intermediaries seem like good How far can development finance assist starting points too. Otherwise, we are in creating a positive impact especially in always open for requests for funding so the off grid clean energy sector? simply reaching out to us might be a good My colleague, Daphne Pit, spoke at place to start too. We are after all only as this meeting. The core of her message good as the partners we work with. www.HEDON.info/QYXB was that working capital funding can be a * Author’s profile crucial stepping stone in scaling (besides, This issue of Boiling Point has a focus on of course, the clear need to fund small and energy access and climate change. What medium enterprises who need early stage in your opinion, is the biggest challenge Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 23 TOOLKITHELPLINE Helpline We are a small company that sells efficient cookstoves in Africa. The type of cookstove we sell is a forced draft gasifier stove, which is one of the most advanced biomass stoves developed to date. We have heard that there is a new financing initiative for projects that introduce efficient cookstove technologies and reduce black carbon and other short-lived climate pollutants. We would appreciate any guidance you can provide on how best to evaluate whether our efficient cookstoves reduce emissions of these pollutants. We would also be interested to learn more about black carbon, the new black carbon methodology and if there are any financial incentives for projects demonstrating black carbon reductions.
Expert response by Donee Alexander and Seema Patel
To begin, it is important to note that In an effort to drive financing into Authors while advanced and efficient biomass cookstove projects that provide measurable stoves do yield benefits, the efficiency impacts on mitigating climate change, the and environmental gains are enhanced Global Alliance for Clean Cookstoves, when the fuel source being burnt is also with support from the Climate and Clean optimised. Processed fuels with high Air Coalition, has provided support for energy densities, low moisture and ash the Gold Standard Foundation’s launch content such as biomass pellets will yield of a new methodology for quantifying better performance from a forced draft and measuring emissions of BC and other gasifier stove over burning raw biomass. SLCPs. This effort provides a tool to This will in turn result in a reduction quantify and monitor emission reductions in emissions. The magnitude of those of these pollutants achieved by projects reductions will continue to increase as focused on efficient cookstove technologies Dr. Donee Alexander clean burning technologies and fuels such or clean burning fuels. The methodology Programme Manager, as pellets, ethanol, solar, biogas and LPG provides a verified outcome in the form of Environment and Health Global Alliance for Clean Cookstoves stoves and fuels scale in the cooking sector. a ‘Certified Outcome Statement’ as a way To answer your question regarding black of providing evidence of the quantity of [email protected] carbon (BC), it is the most strongly light- BC and other SLCPs reduced in a given absorbing component of particulate matter year. The statement can be used in a and is formed through the incomplete ‘results-based finance’ funding scheme combustion of fossil fuels, biofuel and to drive investment into programmes biomass such as firewood, charcoal or that provide efficient cooking solutions. crop residue. Commonly seen as soot, BC Such innovative financing mechanisms warms the Earth by absorbing heat in the are critical to scaling up the adoption atmosphere resulting in an increased pace of clean and more efficient technologies of ice and glacier melting, and disruption and fuels and contributing to health, of weather patterns. It is categorised as environmental, women’s empowerment a ‘short-lived’ climate pollutant (SLCP) and livelihoods impacts. because it only remains in the atmosphere While the actual process of certification for several days to a week. has a number of steps in conjunction with Seema Patel With the reduction of carbon dioxide other Gold Standard annexes, rules and Senior Associate, Fuels taking a priority under the Kyoto Protocol, regulations, once a project completes Global Alliance for Clean Cookstoves SLCPs, such as BC, have taken a back seat. the certification process, they can use 1750 Pennsylvania Avenue, #300 However, recent studies have shown that the Certified Outcome Statement to Washington, DC 20006 BC may be responsible for up to 20% of demonstrate outcomes under results- [email protected] the planet’s warming, making it the second based finance initiatives or similar largest contributor to climate change after schemes and contribute much needed carbon dioxide. This provides developers climate and health benefits as a result. A www.HEDON.info/TYXB of clean and efficient cookstove and fuel more detailed description about the new projects with an opportunity to make an BC methodology is available @HEDON * Access the black carbon methodology immediate impact on climate change at or by emailing [email protected]. both a local, regional and global level. Meet us @HEDON
24 24 HEDON NEWS
Editor Karima Hirji HEDON Household Energy Network 1 Bromley Lane, Chislehurst, BR7 6LH, UK [email protected]
BP68 ‘Energy in Emergency Settings’ coming soon!
The Global Alliance for Clean Cookstoves has partnered with HEDON as the Guest Editor of Boiling Point 68 ‘Energy in Emergency Settings’ to be published at the end of 2015. Though the official deadline for article submissions has now closed, please contact us if you would like to submit an article, as this may still be possible. There are many other ways to be a part of this issue: — Participate in our front cover competition by submitting a photo that illustrates the theme by Sunday 15 November — Lend your expertise by volunteering to peer review article submissions — Support the issue by becoming a Boiling Point sponsor and receive sponsor news pages in BP68 to share your organisation’s latest news, research and projects. Contact Boiling Point by emailing [email protected]
Your organisation could be a Guest Editor for Boiling Point in 2016
Organisations in the household energy sector have been pairing up with HEDON as Guest Editors for our practitioners’ journal. Our 2015 Guest Editors are: Shell Foundation for ‘Building Inclusive Energy Markets’ (March, 2015); ENERGIA for ‘Women, Energy and Economic Empowerment’ (June, 2015); The Climate Group for ‘Decentralised Energy and Boiling Point goes quarterly Climate Change’ (this issue); and the Global Alliance for Clean With the recent publication of BP66 ‘Women, Energy and Cookstoves for our end of year issue ‘Energy in Emergency Economic Empowerment’ in June 2016, Boiling Point is now Settings’. a quarterly journal. We would like to take this opportunity to We are looking for organisations to be the Guest Editors thank the hundreds of people who have enabled this including of our 2016 issues. As a Guest Editor of Boiling Point, the issues’ authors, peer reviewers, the BP Editorial Board, your organisation will work with HEDON throughout the Guest Editor organisations, sponsors and our designer, printer publication process- from deciding on a topical theme that and distributor. aligns with your work, to sourcing and reviewing articles. All of Boiling Point’s past issues are available in the archive Valuing Boiling Point as a platform to share their work with our section of the HEDON website. If you do not have internet worldwide readers, Guest Editors typically contribute a theme access and would like HEDON to send you a past issue of article, news pages as well as write the issue’s Editorial. Boiling Boiling Point, please write to us at the HEDON address Point also provides Guest Editors with a unique feedback provided on the top of this page. opportunity by including specific questions of their choice on our hardcopy feedback from which reaches our target audience – 15 000 off-line readers. www.HEDON.info/UYXB Please contact [email protected] if you would like to learn more about this opportunity. * Access Boiling Point archives
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Boiling Point. ISSUE ISSUE 67 67 — — 2015 2015 25 TCG NEWS
Editors Subaskar Sitsabeshan, Jeroen Gerlag The Climate Group, Riverside Building, County Hall, Belvedere Road, London, SE1 7PB, UK [email protected]; News [email protected]
Bijli initiative reaches 50 000 people The Climate Group
Clean energy, particularly solar and wind, could revitalise The Climate Group (with offices in New Delhi, London, New India’s failing energy system. Today, 40% of India is still York and Greater China) is an award-winning, international not connected to the grid – a number we could eventually non-profit organisation. The Climate Group’s goal is a connect via renewable sources. The Climate Group’s access prosperous, low carbon future. This will be achieved through to rural energy in India programme, Bijli – Clean Energy for a ‘clean revolution’: the rapid scale-up of low carbon energy All, reduces greenhouse gas emissions and enhances the lives and technology. The Climate Group works with corporate and of rural villagers in India by deploying renewable energy government partners to develop climate finance mechanisms, technologies and improving infrastructure quality. Through business models which promote innovation, and supportive Bijli, The Climate Group works with local delivery partners policy frameworks. Successful low carbon growth and to test different off-grid electrification models – hand-held pilot practical solutions are shared so they can be replicated lights, home-lighting systems and micro-grids – in the states worldwide. of Maharashtra, West Bengal and Uttar Pradesh. We’re showcasing the potential of renewable off-grid electricity and identifying sustainable and scalable models to stimulate India’s Bijli debt fund for off-grid energy sector clean revolution. And since Bijli started two years ago, we have reached over 50 000 people in rural India. About 30% of India’s people (77 million households which is But it does not stop there. We are also working on establishing around 360 million people) lack adequate access to electricity. a venture debt fund, to enable flexible and catalytic financing Though grid connectivity and access is expected to improve for the decentralised renewable energy (DRE) sector in India. over the next 10 years, at the current rate of grid expansion, This fund will bridge the gap between the sector and financial urbanisation and population growth, 70-75 million households institutions, so that more and more people can invest in and will still lack access to grid electricity by 2024, inhibiting India’s profit from DRE projects in India. economic growth. The Climate Group’s research and recent experience with the Bijli initiative confirms DRE offers a clean solution to Dutch Postcode Lottery reach rural communities in India with limited or no access to energy. Our research has identified several sustainable DRE The Bijli – Clean Energy for All initiative is principally funded business models with high potential to scale up. However, debt by the Dutch Postcode Lottery. Since 1989, the Dutch Postcode financing has emerged as the primary unmet need in the DRE Lottery has been raising funds to support organisations working sector. Mini-grid enterprises express a need for long term debt for a fairer, greener world, with 50% of its income going to and soft loans to finance expansion and scale up, while solar charity. Having grown to become the Netherlands’ biggest home system enterprises are looking to cover working capital charity lottery, it now supports 92 NGOs. Since its founding, needs and operational costs through debt. the lottery has dispensed over €4.4 billion to its beneficiaries. India is a challenging environment for foreign lenders as regulatory approval to lend foreign capital is difficult to secure. When Indian DRE companies raise capital from abroad,
26 TCG NEWS
regulators ensure a low amount of capital goes out as interest, and also prevent short-term debt coming into India. Even at higher interest rates, most commercial banks are not willing to lend to DRE enterprises because of regulatory uncertainties, lack of collateral, perceived risks and also because the loan amounts are too small. Other financial institutions have found it difficult and time consuming to get approval for projects and applying for benefits like subsidies. As a result, most DRE enterprises raise funds through a mixture of grants and equity. To build on our learning and help fill this critical financing gap, The Climate Group is seeking to create a debt fund to enable flexible and catalytic financing for the DRE sector in India that will bridge the gap to mainstream financial institutions. Key activities of Bijli in 2015 are: 1. Pilot a debt fund to provide access to financing for small StANCE and medium-sized DRE companies (including solar home systems and mini-grid businesses) via flexible financing The South Asia Network for Clean Energy (StANCE) network mechanisms, including credit enhancements to leverage aims to bridge the gap between policy and practice in the local bank financing. clean energy sector of the region, promoting financial and 2. Document pragmatic case studies with DRE companies to technological cooperation between the private sector and test and simulate finance mechanisms that are most needed governments. StANCE is proposed as an apex network of clean for the models to scale efficiently. energy associations and other stakeholders that can provide a 3. Produce a project summary report to spread knowledge to regional platform comprising members from business, civil potential investors and other key stakeholders in the DRE society and academia to exchange information on policies, sector. technologies and financial mechanisms for the accelerated This will be the first debt fund with a focus solely on providing uptake of clean energy (renewable energy and energy efficiency) debt financing to help scale the DRE sector in India. A in South Asia. dedicated debt fund will help bridge the gap and enable smaller StANCE members include clean energy networks from DRE companies to build robust financial evidence to graduate countries including Afghanistan, Bangladesh, Bhutan, India, to mainstream financing institutions. Further, it will help build the Maldives, Nepal, Pakistan, and Sri Lanka and is initiated by the nascent DRE financing ecosystem so desperately needed to The Climate Group with the Centre for Innovation Incubation help India accelerate its transition to a clean energy economy. and Entrepreneurship and with support from International Renewable Energy Agency and UKAID.
Boiling Point. ISSUE ISSUE 67 67 — — 2015 2015 27 TCG NEWS
The Climate Group’s first ever Off-grid growth and business innovation India Off-Grid Energy Summit Dr Arunabha Ghosh, CEO of the Council on Energy, On 19 August 2015 top off-grid energy practitioners, Environment and Water, who looked to the government’s policymakers and entrepreneurs agreed that sector collabor- targets – this time the Solar Mission of 100 gigawatts by ation is the most effective way to lead India’s flourishing 2022 – controversially said “whether we get there by 2022 renewables market, signifying another self-assured step or 2025 is not the most important question. It’s where does towards global energy access for all. DRE fit in?” An expert panel chaired by Shri Tarun Kapoor, The summit was introduced by The Climate Group’s India Joint Secretary of MNRE, pointed out that despite challenges Director Krishnan Pallassana who laid out the achievements such as power shortages, grid maintenance and finance issues, of The Climate Group’s off-grid energy initiative Bijli - Clean the government is moving forward with DRE “in a big way”. Energy for All, principally funded by the Dutch Postcode Dr Harish Hande, Co-founder and CEO of SELCO India and Lottery, which recently exceeded its target for connecting COO of SELCO Foundation, said this market clarity will rural communities to renewables in India, connecting over 50 “pave the way for entrepreneurship and innovation, which 000 people. Speaking next, The Climate Group’s CEO Mark will percolate into the wider economy.” He further pressed on Kenber praised off-grid renewable energy for helping meet the the transcendence of seemingly small-scale DRE, stating: “We world’s UN Sustainable Development Goals as well as being should look at off-grid as something that India can incorporate ‘right at the heart’ of climate and economic development in Paris at the COP21 climate talks”. Giles Bristow, Director of challenges and solutions. “That is why it is so exciting to see Programmes at Forum for the Future agreed that the impact of so many people here today. The Climate Group convenes, DRE in India is reverberating outside of South Asia too, with catalyses and communicates those solutions; we bring people off-grid solutions “appearing on ministers’ radars” in the UK. like you together to make that change happen, and crucially, The Director also urged innovation at the “systemic level”, provide an example to the rest of the world.” Also clarifying suggesting that other sectors benefitting from off-grid such as the huge potential for DRE in remote areas were speakers Svati health or agriculture should reward developers too. Bhogle, Chair of Clean Energy Access Network and Vikas Innovating cross-sector finance and business models to Dawra, Managing Director of YES Bank, who nodded to the grow DRE was also touched on by Dipal Barua, Founder of Bijli initiative as evidence of DRE’s manifold positive impacts Bright Green Energy Foundation, “whatever model is most including in areas of education and healthcare. suitable: we don’t need to reinvent the wheel.” However, Ashvin Dayal of the Rockefeller Foundation explained that this complex, dynamic and evolving nature is fundamentally Power of collaboration the marketplace’s biggest challenge for entrepreneurs and investors, so in order to survive they “must be comfortable But while these benefits have translated into progress, by 2024 with many solutions coexisting”. To navigate the market he it is estimated that 70-75 million households will still not be called for “a lot more coordination” and the greater ongoing grid-connected at all, as H.E. Fons Stoelinga, Ambassador of “convergence of policy, finance, entrepreneurs”. Netherlands to India restated. In order to hit those targets, Following thematic sessions on policy, finance, business he warned we must redouble our collaborative efforts. A innovation and technologies, the all-day summit closed with a similar message came from Upendra Tripathy, Secretary plenary led by Krishan Dhawan of Shakti Sustainable Energy of the Ministry of New and Renewable Energy (MNRE), Foundation. He applauded the summit’s participants in helping Government of India, who suggested we “come together “rural India reach its aspirations” and said the thematic across different platforms”. The power of collaboration sessions offered a “huge learning opportunity” which “must was illustrated by H.E. Richard R. Verma, Ambassador of be consolidated”. Dr O.S. Sastry National Institute of Solar US to India, who announced an initial call for proposals for Energy Gov of India, Ashis Kumar Sahu of CLEAN and Colin the US-India US$ 7.9 million PACEsetter Fund, a compelling Dreizin of USAID - who hoped India “will be a model for other bilateral cooperation to accelerate clean energy innovation in countries” - made up the final segment, along with Jaco Cilliers underserved communities. Then reminding the audience of of UNDP India. Jaco Cilliers summarised the day’s events by India’s ‘breakneck’ development as the context for initiatives explaining the standard development hurdles all charities and like PACEsetter and the government’s plan to connect 18 500 governments have to overcome whatever the concept, including villages over the next 1000 days, the Ambassador put simply: finance, policy and improving understanding. “We can honestly “Half of rural households cannot participate in India’s growth say the political hurdle is not there anymore, as there are as they are not connected to grid based electricity.” large scale commitments from government and India wants to take the leadership role. The work we have done today is the motivational hurdle; it must be addressed and overcome.”
28 TCG NEWS
Author Krishnan Pallassana India Director The Climate Group Room Number 1203, Chiranjiv Tower 43 Nehru Place New Delhi, 110019, India
Energy access blog
Krishnan Pallassana, India Director of The Climate Group, writes about the importance of connecting rural communities with decentralised renewable energy (DRE) in India – and how the gathered experts at The Climate Group’s first ever India Off-Grid Energy Summit can accelerate this burgeoning market.
“Climate change will define the political economies of tomorrow. And as results from The Climate Group’s Bijli - Clean Energy for All initiative have shown, the DRE sector provides a unique and compelling business opportunity for India’s off-grid communities to thrive and flourish in this emerging low carbon, global economy. that utilise wind energy, hydro power and hybrid systems to Yet despite knowing electricity is a prerequisite to meet the meet energy requirements of rural areas. A Government target basic needs and economic development of any country, only of 100GW solar power by 2022 under the Jawaharlal Nehru 56% of India’s population has access at the national level and National Solar Mission, also includes an ambitious 20GW just 44% do in rural areas. This means more than 400 million from off-grid systems such as solar home lighting systems, people in rural India have no access to electricity. This situation solar lanterns, micro-grids and pumps. is only going to get worse as energy demand doubles by 2030 By working together with the public sector, the private with India’s estimated economic growth. sector plays an important role in deploying innovative A primary reason for poor electrification is the limited financing mechanisms to expand DRE solutions to underserved reach of the national power grid. But the remote locations communities. Scaling up renewable off-grid energy would not and low incomes of the rural population make grid extension only create millions of jobs, but also sustain India’s positive uneconomical. economic growth and help lift its massive population out of Traditionally, off-grid communities have relied on diesel poverty. Potential growth in off-grid solar power and DRE generation and kerosene lighting. Both are expensive and offers a ray of hope to the 40% of India’s 1.2 billion population polluting, with one of many problems being the fact that who lack access to energy. kerosene fumes trigger chronic illnesses, particularly for Together at the first-ever India Off-Grid Energy Summit, we children. So for India’s whole population to move along the brought together the people who can make this hope a reality. social and economic ladder, their energy requirements must be From practitioners to investors and funders, we discussed how addressed urgently. And off-grid renewable energy is one of the to work within the larger renewable energy framework of the most dependable solutions: it is more reliable. It is cheaper. It Government of India to deliver a collective roadmap to connect is cleaner. clean energy in India. For all.” Thankfully the country’s DRE market is ripe for expansion. In fact, DRE businesses already serve close to 100 000 households. The Climate Group conducted in collaboration with Goldman Sachs Centre for Environmental Markets, with an expected rapid growth of 60-70% annually to bring that total to around 900 000 by 2018. By the same year, India’s DRE market is estimated to be worth at least US$ 150 million. For renewable energy to really gain momentum in India though, we must overcome barriers including high capital costs, poor subsidy disbursal, minimal guarantee of returns, and operation and maintenance challenges. So what is the government doing? While it has extended the national www.HEDON.info/VYXB electricity grid, this policy failed to address the real needs of * Additional pictures from the off-grid summit poorer communities as fossil-fuel based grid electricity is still too expensive for them. Fortunately however, the Government of India has also made serious efforts to introduce DRE projects Meet us @HEDON
Boiling Point. ISSUE ISSUE 67 67 — — 2015 2015 29 GIZ NEWS
Editors Caspar Priesemann, Monika Rammelt GIZ HERA, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Postfach 5180,65726 Eschborn, Germany [email protected]; [email protected]
NEWS
German development cooperaton during the German Solar Industry Association features Vienna Energy Forum off-grid power during Intersolar This year’s Vienna Energy Forum (VEF) brought together As participation at Intersolar in Munich decreased to 1000 over 1000 participants from over 60 countries, including exhibitors and 38 000 visitors amidst a contracting solar 24 ministers and high-level participants of international energy market in Germany, the increasing attention for the Off- organisations. The forum was shaped by three key international Grid Power Forum that the German Solar Industry Association events taking place in 2015: The third International Confer- (BSW) hosts annually can be considered as a positive trend. ence on Financing for Development to be held in Addis Ababa The forum grew in size compared to the previous years and in July; The UN Summit for the Adoption of the Sustainable functioned as a key point for various actors to convene and Development Goals to be held in New York in September; exchange. Besides unofficial exchanges, practitioners from the and The 21st Conference of the Parties to the UN Framework private and public sector as well as academia had the chance Convention on Climate Change to be held in Paris in late to share insights on a variety of topics that covered PV-hybrid November. VEF events and discussions mostly referred to these mini-grids, irrigation, water desalination, village electrification, events and their relevance for the global energy sector. storage solutions and more. To access the forum’s presentations For GIZ, EnDev and the German Development Cooperation, contact [email protected]. VEF 2015 was an important event in many ways: BMZ, GIZ, KfW, EnDev, EUEI PDF and the Africa-EU Energy Partnership Newly electrified health centres in rural areas hosted and presented on a number of side events and high-level of Ethiopia panels, one of which was on the first night of the conference; EnDev celebrated its 10 year anniversary during the welcoming On 9 June 2015, the German and Irish Ambassadors to Ethiopia reception; and SE4All’s Secretary-General Kandeh Yumkella handed over 25 solar-powered health centres in Southern congratulated Carsten Hellpap and his team on being one Nations, Nationalities and Peoples’ Region (SNNPR) to the of the most – if not the most – successful energy access Regional Bureau of Health. The ceremony took place at the programmes worldwide. Furthermore, GIZ, EnDev and KfW Gebaba health centre in the remote Silte Zone. Implemented were acknowledged for their crucial contributions towards by GIZ on behalf of the EnDev programme and co-financed by the development of a multi-tier framework methodology for Irish Aid, the project facilitates modern health services in rural measuring energy access that was led by Vivien Foster, World areas through solar electrification. Bank Senior Economist and key author behind the Global All of the health centres, including the one in Gebaba, are Tracking Framework. off the country’s power grid. In Gebaba alone, almost 29 000 The Global Tracking Framework 2015 was officially people receive better health service due to electrification. The launched during the Forum. It shows a slight positive trend photovoltaic (PV) system enables the operation of microscopes, towards energy access on a global scale, yet increases only come sterilisers and fridges (for medication which needs to be kept from people’s electricity access shifts from tier 1 to tier 2. This cool). Maternal health services are expected to improve means that both productive uses of energy (which is mostly significantly. The solar power generated is also pumping clean possible from tier 3 onwards) as well as access to modern water to the clinic and the surrounding villages. At regional cooking energy are behind in development. For the latter there level, the project partners are the Bureau of Health, the Bureau is even a downward trend as statistics show decreasing access of Finance and Economic Development and the Mines and numbers due to rapid population growth. Compared to the Energy Agency. The installation and construction work was 2.7 billion people cooking on solid biomass reported in 2013’s done by national companies who have been trained to take care Global Tracking Framework, this year’s report cites 2.9 billion of maintenance and repair in the future. For more information people. This is despite the major efforts of the Global Alliance contact [email protected] for Clean Cookstoves to bring more attention to the issue of cooking energy and their success in substantially growing donor commitments to the sector. These developments show that energy access is still far from becoming a ‘no-brainer’.
30 GIZ NEWS
PUBLICATIONS
GOGLA publishes joint governmental Building energy access markets guidance note with United Nations To support action towards increasing access to modern energy Environment Programme services, in particular in Least Developed Countries, EUEI PDF and Practical Action Consulting have developed a new analytical In May 2015, GOGLA and the United Nations Environment framework that allows conceptualising energy market systems Programme (UNEP) launched a joint report at the Sustainable through a systematic value-chain approach. The framework Energy for All Forum (SE4All) in New York. The report, focuses on decentralised energy market systems of electricity ‘Developing Effective Off-Grid Lighting Policy - Guidance mini-grids, solar PV lanterns and home systems; and biomass Note for Governments in Africa’, recommends best practices and LPG stoves and fuels, although it could be adapted to and smart policies that aim at enabling the market uptake address other markets, including electricity grids, mechanical for off-grid lighting solutions. The publication was jointly power and biogas. It breaks down each energy market system launched by UNEP, GOGLA, and the Economic Community of to be mapped into three main levels: its energy market chain; West African States’ (ECOWAS) Centre for Renewable Energy its inputs in terms of goods, services and finance; as well as its and Energy Efficiency (ECREEE). The BMZ had co-funded the enabling environment factors. On this basis, specific barriers, report and GIZ HERA supported its development. The report which impede the delivery of the energy products or services, is available @HEDON. can be identified. This in turn enables the definition of targeted interventions for overcoming these barriers and thus unlocking Gender Briefing Notes market uptake. As opposed to generic statements about the success factors and barriers to energy market development, the The EUEI PDF in cooperation with ENERGIA has developed framework allows analysis of where specifically such aspects the Gender Briefing Notes on supporting active inclusion of arise and how they can be addressed effectively. The framework women in energy and development projects. The publication is presented in Boiling Point issue 65, available @HEDON. highlights relevant gender dimensions in EUEI PDF’s four thematic pillars: Energy Access, Renewable Energy, Biomass Energy and Energy Efficiency. It aims to assist EUEI PDF partners, consultants and energy practitioners to ensure equal benefits for men and women in development projects in the energy sector, as well as to ensure a gender sensitive approach in ongoing and future interventions. The publication is available @HEDON. Handbook on Low Cost Electrification Technologies The EUEI PDF in collaboration with the Africa Electrification Initiative has published a Handbook on Low Cost Electrific- ation Technologies (available @HEDON) aimed to support practitioners at power utilities and rural energy agencies in developing cost-effective electrification approaches adapted to loading conditions in rural areas. The handbook reviews a number of appropriate low-cost electrification approaches, tested in several countries as cost-effective solutions for providing electricity supply to low-load density rural areas. The handbook also covers the issue of maximising service connections in completed rural electrification schemes and www.HEDON.info/WYXB provides basic guidance on the planning process related to the * Links to extended news items and reports choice of technology, selection of areas to be electrified and the progressive development of the power network. Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 31 GENERAL
PEER REVIEWED General Energy market systems development: Lessons from the urban food processing sector in Indonesia
Keywords: Energy efficiency; Cleaner production; Indonesia; Market development; Productive use; Food-energy nexus; Micro-processing
Authors Will Baron Technical Adviser Economic and Market Development Mercy Corps
David Nicholson Technical Director Energy and Climate Mercy Corps Global Headquarters 45 SW Ankeny St. Portland, OR 97204, USA
Picture 1: Product line from Rumah Tempe, the projects Scaling Sustainable Consumption and Production of the Soybean first model processing unit Processing Industry in Indonesia (SCOPE) was a three-year market (Source: Mercy Corps Indonesia) development programme funded by the European Commission. The programme sought to address high resource intensity in the Indonesian tofu and tempeh sector, which employs approximately 285 000 low-wage workers in an estimated 85 000 enterprises. Through catalysing a shift in the production practices of micro and small tofu and tempeh enterprises in Jakarta, Indonesia, the programme stimulated uptake of cleaner production practices using clean burning fuels, hygienic equipment and process improvements. This learning study describes the key findings and lessons learnt through implementation.
Mercy Corps’ Scaling Sustainable clean technology in the local market; the Introduction Consumption and Production of the Soy- lack of information and awareness among bean Processing Industry in Indonesia market actors; lack of financing options for n Indonesia, tofu and tempeh produced Programme (SCOPE) funded under the investment in technology; and low demand from soybeans are a staple source of European Commission’s Switch Asia mech- from daily consumers for tofu and tempeh Iprotein consumed by millions every day. anism, spotted the potential in the market that is produced in a cleaner, healthier Yet their production is highly energy-intensive system for tofu and tempeh to achieve the environment. and is a major source of local pollution and two programmatic goals of promoting carbon emissions. Mercy Corps assessments energy efficiency and reducing environ- Project description calculated average carbon emissions for tofu mental impact; and of contributing to pov- and tempeh factories of 273 tons per day, erty reduction through improvements in SCOPE used a market systems develop- which implies estimated carbon emissions for the profitability of tofu and tempeh MSEs. ment (MSD) approach to stimulate sys- the sector of over 200 million tons per year. To achieve these goals SCOPE aimed temic change in the tofu and tempeh Micro and small enterprises (MSEs) represent to catalyse a shift to clean production sector for achieving large-scale and the bulk of production and emissions, using clean burning fuels, and efficient sustainable impact. The strategy aligns predominantly relying on firewood and and hygienic equipment such as stainless with those taken by other Mercy Corps inefficient and unhygienic equipment such as steel vats and steam boilers. MSD programmes in the energy sector open fires and oil drums. The tofu and tempeh The programme was designed to address such as the Energy for All Programme in sector employs approximately 285 000 low- the key barriers to a market-driven switch to East Timor (market system development wage workers in an estimated 85 000 MSEs. cleaner and more efficient production. These for household solar and cookstove (Bank of Indonesia, 2011). were: the lack of availability of appropriate products), however this was the first
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Picture 2: Typical tofu and tempeh production site in Jakarta (Source: Mercy Corps Indonesia)
Energy market systems development: Lessons from the urban food processing sector in Indonesia
Keywords: Energy efficiency; Cleaner production; Indonesia; Market development; Productive use; Food-energy nexus; Micro-processing time Mercy Corps applied the approach to an urban micro-processing sector. SCOPE was predominantly implemented using a facilitation approach to stimulate commercially-driven investment by pri- vate sector actors, with minimal grants or subsidies provided by Mercy Corps. SCOPE implemented interventions target- ing four identified constraints: Sustainable supply of clean equipment: channels remains quite limited. On the Lessons and recommendations SCOPE partnered with existing equipment other hand, SCOPE met with minimal for energy market manufacturers to develop and promote a success in stimulating a sustainable mar- business case for producing high-quality ket system change in terms of the provi- development programme processing equipment. sion of loans to MSEs by financial services practitioners Promotion of clean equipment and providers and in the promotion of clean practices to increase demand: SCOPE facil- tofu and tempeh products to consumers 1. R&D for new technology solutions itated market relationships and provided by MSEs. can take a long time and can result capacity-building support for equipment As a result of these changes to the in technological ‘dead-ends,’ limiting manufacturers, resellers and KOPTIs (tofu market system stimulated by the SCOPE potential programme impact. and tempeh cooperatives) for the promo- programme, 770 tofu and tempeh MSEs tion of clean technology. accessed clean technology from the The SCOPE team spent significant staff Supply of loans to MSEs: SCOPE sup- suppliers within the project and adopted time for more than a year to support the ported existing commercial financial en- improved practices or processes, only design and testing of a new vacuum cooker, tities to offer loan products suitable for slightly less than the ambitious target of which ultimately proved non-viable. target MSEs, and facilitated their linkages 800. This outcome has had an impressive Deciding whether or not to invest in local with producers. impact in terms of the dual programme technology R&D is a significant challenge Consumer awareness: The SCOPE goals, reducing environmental impact and in other Mercy Corps’ energy programmes team directly implemented activities that contributing to poverty reduction. that have a production component, included mass media promotion on televi- From an energy perspective, the switch in particular those promoting cookstoves. sion, radio and in newspapers, and coordi- to clean burning fuels, largely LPG and Recommendation: MSD programmes in nation with consumer awareness groups. some biogas, had a significant environ- the energy sector should avoid including mental impact. Firewood-usage among an R&D component, instead seeking Project impact these MSEs fell by 73%, leading to an to integrate existing technologies with estimated direct emissions reduction of adaptations as necessary. When included, The SCOPE programme met with varying 260 000 tons of CO2e (assuming equip- R&D activities should be conducted degrees of success in catalysing sustain- ment lifecycle of three years. by the commercial actors themselves able market system change. In stimulating Switching to clean production practices with programme implementers playing a the sustainable manufacture and supply of resulted in significant increases in profits, facilitation role. clean energy equipment, SCOPE achieved with 38% of switching MSEs reporting impressive results; three partnering man- at least a 25% increase in profit margins. 2. Low consumer awareness of new ufacturers have become market-driven Almost 4000 workers were employed energy technologies creates a barrier for suppliers of clean energy technology and by the 770 MSEs that switched and the rapid uptake and economies-of-scale have continued to sell equipment beyond poverty impact of SCOPE was achieved as among market actors. At the same time, the end of the programme and an addi- a result of improvements in their working tional five manufacturers also spontane- conditions; more than 2000 workers direct engagement in marketing and ously entered the market and are produc- benefited from an average 20% increase awareness-raising by NGOs or other ing competing technologies for sale to in wages (compared with less than 40 non-market actors is often ineffective. MSEs (known as ‘crowding in’). The pro- workers that experienced a reduction in gramme has also stimulated new distribu- pay) and 2300 workers also benefited Prior to the SCOPE programme, aware- tion channels and proactive promotion of from a 14% reduction in working hours. ness of clean production technologies clean energy equipment by retailers and MSE owners credit these changes to among tofu and tempeh MSEs was ex- KOPTIs, and this too appears to have ex- increased outputs, profits and efficiency tremely low (<10%). Generating aware- cellent prospects for sustainability, though improvements particularly in terms of ness of the new equipment options was the geographic reach of these distribution time-savings. thus a major priority and challenge. The
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pressure to rapidly achieve scale builds 4. Energy market development Recommendation: Early engagement the temptation for non-market actors to programmes are particularly with government during the design phase can engage in some direct marketing as a one- vulnerable to fluctuating energy create conditions for positive government time boost to consumer awareness and support. Although it is rarely possible to prices and government subsidy shifts, market uptake, as was the case with the persuade government to stop free distri- SCOPE programme. Yet the programme’s which creates uncertainty around butions altogether, advocating for distri- investment in mass marketing to consum- technological choices. butions in areas far from the programme ers was ineffective as it did not build a The price of LPG increased by 29% in the target consumer market is possible. clear link between the producers and re- course of the SCOPE programme, creating tailers, and it could not compete with the a disincentive for the MSEs to purchase 6. Biogas technology offers significant widespread and sophisticated advertising clean technology. Dual-fuel technologies potential for food processing in urban of large corporations. helped to mitigate this uncertainty; the environments; however significant Recommendation: MSD programmes in manufacturer of steam boilers for tofu R&D is required for this to become a the energy sector should focus on supporting production responded to requests from marketing and promotion by private MSEs and developed a design that could viable and scalable solution. sector partners. Any direct investment in use firewood or LPG. MSEs were therefore The SCOPE programme experimented marketing or awareness-raising should have able to switch between the two depending with biogas as an alternative fuel to LPG. a very clear objective and timeframe. Large- on price and availability. With high density of organic waste, initial scale marketing should only be attempted Recommendation: The development of tests and demonstrations showed real where the audience is clearly defined and multiple technology or fuel options for promise for particular market segments. relatively confined. consumers is the best way to avoid subsidy However, the team recognised significant price risk. Conducting a detailed and barriers. The challenge in collateralising 3. For new technology investments, up- clear cost benefit analysis (CBA) for new the technology and the large physical front trust in both the technology and technologies at the start of the programme space required for biogas plants, made it the suppliers is important to stimulate can reduce uncertainty by identifying the impossible for many producers operating price parameters for various options. in high density parts of Jakarta. market demand, particularly larger Recommendation: Future programming scale technology. 5. The public good characteristics of in the target area should focus on the For tofu and tempeh MSEs, the purchase energy services, and the externalities development of appropriate financial prod- of new clean technology represented a that energy consumption produces, ucts to allow technology uptake, as well large and one-off investment. This is typi- as R&D in partnership with local market mean that energy market development cal for market development programmes in actors to develop more flexible technology the energy sector. By contrast, consumers programmes often have to navigate the designs. in many other sectors, such as the agricul- prominent involvement of government. ture sector, can often start with small pur- During the SCOPE programme, government Recommendations for donor chases of products or services and increase was quick to respond to the new designs for policy makers purchases over time based on frequent energy efficient technology; province-level line repeated transactions and growing trust. ministries purchased sample equipment from 1. Clean energy market development The SCOPE team and the KOPTIs recog- retailers and distributed it for free to MSEs programmes should include inception nised the need to rapidly build up-front in their area, and the Ministry of Industry phases to allow time for more detailed trust in the clean equipment. This led to introduced recommended standards for the market analysis and any required an increased focus on model factories and sector. This type of government intervention peer-to-peer visits to demonstrate the new can either have a positive or negative impact technology R&D. technology in action. on the emerging market system. Government The SCOPE programme based intervention Recommendation: Intentional strategies has the reach and influence to be a powerful strategies on the results of market analysis for building trust in technology solutions force for promotion of new technologies and conducted during proposal phase which, and suppliers are essential to success in energy practices. Unfortunately, promotion although sufficient for high level strategy energy technology market development is often taken to be synonymous with free setting, was not in depth enough to inform programmes. Formal warranties can do hand-outs, which undermines nascent a nuanced implementation strategy. Pres- this to some degree, but demonstration markets. For the SCOPE programme, free sure to begin concrete activities from the installations and peer-to-peer visits are distributions were largely concentrated in programme start limited the ability to in- effective ways to build in the technology non-target locations, and government played vest time in a full cost-benefit analysis and while also increasing interaction between an important role in building momentum market segmentation, which would have suppliers and consumers. among key stakeholders. greatly benefited the programme.
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Picture 3: Combining clean energy with high hygiene standards at Rumah Tempe (Source: Mercy Corps Indonesia)
84%
2. Funding agreements should encourage programmes to re-evaluate intervention designs and change course as learning increases, rather than restricting changes to original designs. Adaptive management aims to empower 4. Efforts at increasing uptake of clean Reference teams to seek new opportunities and energy technology can and should take experiment, using rapid feedback loops to a MSD approach where real cost- Bank of Indonesia, 2011. Pola adapt and scale interventions up or down pembiayaan usaha kecil (PPUK). benefit and return on investment can be in response to changing circumstances Sentra produsen tahu tempe. and new learning. The ability to manage demonstrated. At the same time strate- programmes adaptively is vital to the gies should be encouraged that explore Authors’ profiles success of any market development and promote non-market incentives. programme. This is particularly true William Baron is a technical of the energy sector due to the high Non-economic incentives can be a key specialist in Mercy Corps’ economic prevalence and variability of energy driver of market system and behaviour and market development (EMD) subsidies, and the rapid advancements change, but a lack of clear economic technical support unit. Particular areas of focus are the intersection being made in energy technologies. incentives is a major hindrance to uptake of market development, conflict and SCOPE was constrained by restrictive by market actors. During SCOPE, 53% governance programming, and the donor regulations that made even of MSEs identified their motivation for application of MSD approaches in small changes to activities and staffing switching to clean production as non- the energy sector in fragile states. extremely difficult, as well as by a team economic factors (a clean kitchen and less He has worked for Mercy Corps culture that did not encourage significant smoke) in comparison to the 26% who for more than five years, including adaptation. A log-frame that included attributed economic factors (time savings, designing, managing and advising indicator targets for each activity meant a higher value product or increased sales). on a diverse portfolio of market the SCOPE team felt locked into rolling Nevertheless, uncertain economic in- development initiatives. out the prescribed number of trainings, centives can result in sluggish system even when these were not proving change. This appears to have been a fac- David Nicholson leads Mercy Corps’ effective. tor in the SCOPE programme, where the Technical Unit for Environment, increasing price of LPG acted as a disin- Energy and Climate (EEC), which 3. Energy MSD programmes need to centive for 25% of the MSEs to purchase supports programmes across clean equipment. the Mercy Corps global portfolio. invest in sufficient staffing levels to be EEC is focused on helping field effective. Facilitation approaches rely teams address energy access on the team’s ability to spend time with through programming designed key actors, building relationships, to accelerate market-based clean Acknowledgements energy solutions for the base of the problem solving and building trust pyramid, while also supporting the in technology. This work was made possible integration of climate and ecological thanks to support from the EC systems thinking into Mercy Corps The SCOPE team developed deep re- SWITCH Asia for Mercy Corps’ development and humanitarian ‘Scaling Sustainable Consumption lationships with the KOPTIs based on programming. and Production of the Soybean mutual understanding and trust, but Processing Industry in Indonesia’ engagement with other private sector programme agreement number DCI- actors was ‘light-touch.’ In large part, ASIE-2011-279-121. The authors SCOPE lacked the staff time to engage would like to thank Mercy Corps’ more deeply, which limited the pro- Indonesia team for their hard work gramme’s ability to work with market in implementing this programme actors to identify opportunities. For and support during the development www.HEDON.info/YYXB example, more active engagement and of this learning study. Particular facilitation with equipment manufac- thanks go to Paul Jeffery, Danielle * Additional pictures De Knocke Van Der Meulen, Shanti turers and retailers could have helped Kleiman, Mohammad Ridha, and the develop broader and more effective last- entire SCOPE team. mile distribution channels. Meet us @HEDON
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PEER REVIEWED
Demand side analysis of warm comfort improvements in high cold regions: A case from Huancavelica, Peru
Keywords: Ger; Heating stoves; Household behaviour; Stove use monitors; Field study; Air pollution
Authors Mariana Jiménez Researcher Assistant MicroEnergy International mariana.jimenez@microenergy- international.com Lukas Kahlen Consultant MicroEnergy International GmbH, Postdamer Str. 143- 10783, Berlin, Germany lukas.kahlen@microenergy- international.com
Picture 1: Snapshot of the Andes from a mountain community (Source: Judith Ibañez, MEI)
The low economic level of Huancavelica, Peru is reflected in the poor housing conditions in which most of its inhabitants live. This situation, together with the harsh weather conditions (typical of the High Andes region) and the use of inefficient and pollutant energy devices, such as open fires for heating, negatively contribute to the living conditions of many of the poorest households in Huancavelica. With this in mind, a research study is conducted within the region to assess the potential demand for technologies and (passive) house improvement measures, which could help improve the warm comfort performance of poor households in the area. The article summarises the main findings of the field research study, highlighting those technologies and house improvement measures with potential to be implemented in the region. Additionally, it presents the main barriers for a large scale dissemination of such improvements and suggests ideas to overcome those challenges.
Introduction even more pronounced than before, Services) and in the framework of its pro- with oscillations that can go from -8°C ject ‘Adaptation to Climate Change and uancavelica, a region where to 25°C, in a single day, in communi- Disaster Risk Reduction in Prioritised 454 797 Peruvians live, is one ties located at higher altitudes (IFAD, Watershed Areas of Ica and Huancave- H of the most deprived areas of 2008). This mix of poverty and coldness lica (ACCIH)’, in cooperation with Mi- Peru, with 57% of its population living has fatal consequences for the inhabit- croEnergy International GmbH (MEI), in poverty and 16.3% in extreme pov- ants of Huancavelica, especially affect- decided to conduct a demand side study erty (Oficina de Enlace del Congreso del ing children and elder people. In 2010, for analysing the current energy us- Estado, 2012). Alongside these extreme the Ministry of Health reported that age patterns and housing conditions of poverty levels, the region faces chal- 250 children under five died as a conse- Huancavelica’s households. The final lenges of harsh and long winters due to quence of the intense cold (Save the Chil- objective of the study was to pre-select its geographical location in the Andes dren, n.d.). warm comfort improvements, in terms of Mountains (Picture 1). The melting of With this in mind, Deutsche Gesells- technology upgrading and passive house the tropical glaciers, as a consequence chaft für Internationale Zusammenar- improvement measures, that will be best of climate change, has influenced the beit (GIZ) in the scope of its programme suited for implementation in the region weather, making temperature variations HERA (Poverty-oriented Basic Energy according to the identified demand.
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Picture 2: A typical tapial house found in the region (Source: Judith Ibañez, MEI)
This article provides the pre-selection list of clean energy technologies (CET) and passive house improvement measures that could be implemented within the region, based on a field research study conducted with 414 households in the five districts of Huancavelica. Additionally, the article provides insights on the possible challenges when aiming at disseminating CET or fostering house improvements in Households of Huancavelica: The right improvement for the Huancavelica region. An overview the right household The outcomes of the study showed that In order to pre-select the warm comfort Understanding warm comfort the majority of households sampled improvements which would be most suitable in Huancavelica consisted of families for the targeted households, the results of improvements in low-income with four to five members, with a high the survey were analysed and cross checked regions percentage of young members (under 16 with a list of CET based on the household’s years). The educational level is low but identified needs, the potential benefits of most households are currently employed every warm comfort improvement and the According to international standards, in different activities with stockbreeder, experience from similar projects previously warm comfort can be defined as ‘that homemaker and irregular employee carried out in other regions. The demand condition of mind which expresses sat- (without a fixed salary) as the most side analysis is complemented by classifying isfaction with the thermal environment common. Additionally, a large number of the warm comfort improvements in terms and is assessed by subjective evaluation’ households breed cattle (generally alpacas of demand level (high, medium and low) (ASHRAE, 2013). Being a subjective con- for wool, meat and milk) or cultivate according to the interviewed households’ dition, the actual value for a comfortable crops for self-consumption. identified preferences and willingness to pay. indoor temperature varies from person to As expected, the average income found The outcome of the study is summarised in person. Nevertheless, in the context of en- in the region is low, with at least 50% the following paragraphs. ergy access for low income households, the of the households sampled earning less minimum standard recommended is 18°C, than the established minimum wage in High potential demand considering the health impacts that lower Peru, fixed in 2015 at around €214 per temperatures can have, but stating that month (Capital, 2015). Still, all of the PHM- House insulation: Generally, the low this temperature must be achieved by af- households interviewed stated that they satisfaction level that most households have fordable means which avoid indoor smoke owned their home with most stating they with respect to their housing conditions is production and do not imply an excessive are dissatisfied with their present housing translated into a high interest for investing use of fuel (Practical Action, 2014). conditions. The main building material in house remodeling measures, regardless Considering that background, the used in the region is ‘tapial’, similar of the warm comfort factor. While asking development of this study parts from to ‘adobe’, and most of the houses are for preferences for remodeling, a high the assumption that the warm comfort designed with just a few rooms with just number of households were interested performance of poor households can be one or two windows (Picture 2). Around in insulating the ceiling, floors and walls improved by two means: half of the households (54%) stated to of their houses. Since it was found that Technology upgrading (TU): Substi- have a house area above 70 m2, however most houses present cracks and dampness tution of the current energy systems used this information is considered unreliable problems, the implementation of insulation for a more appropriate and efficient device given the characteristics of the houses measures is expected to help improve which can proportionate the same energy observed during the field study. the thermal comfort for most of the service while using a minimum amount Even though 82% of the households households, while also improving health of fuel and avoiding the production of sampled have access to the electrical and fuel saving potential. smoke inside the house. grid, the service is mostly perceived as TU- Improved cooking stoves: Field Passive house measures (PHM): Use of unreliable, causing many households research illustrated that a quarter of the passive housing principles (insulation, effi- to have candles and battery lamps as households sampled only use a three stone cient windows installation, heat recovery, a backup for lighting. Additionally, fire (TSF) for meeting their energy needs and solar energy usage, amongst others) the most common electrical appliances in terms of cooking and water heating to reduce the amount of energy needed to owned by the households interviewed are as well as space heating requirements. maintain the house’s thermal comfort. cellphones, radios and televisions. Within this specific group, it is believed
Boiling Point. ISSUE 67 — 2015 37 GENERAL TSF Located Inside the House TSF Located Outside the House
90 80 70 60 50 40 30 20 Number of Households 10 0 There is no smoke Not Much Sometimes Much No Answer inside the house Figure 1: Perception of smoke affectation of households using the three stones fire (TSF) according to the location of the TSF with respect to the house, n=259 (Source: Author’s own elaboration based on field research data)
Household's Level of Satisfaction with Different Housing Aspects
200 (electric heaters); additionally, just 18%
180 were aware of and interested in acquiring a heating system. Nevertheless, the fact 160 that 38% of households already own an 140 Windows Doors efficient device for cooking/water heating 120 Ceiling (ICS, electric or gas stoves) but still use an Walls 100 Floor open fire (TSF) for space heating, presets Indoor Temperature 80 an opportunity to introduce more efficient
Number of Households systems, allowing the household to achieve 60 fuel savings. However the final selection of 40 the adequate heating systems needs to be 20 further analysed. 0 123456 Possible barriers for success
Figure 2: Household’s level of satisfaction with the current state of different housing Through the demand side analysis, aspects, n=412 (Source: Author’s own elaboration based on field research data) several aspects have been identified as potential barriers for implementing either technology upgrades or passive measures that there would be a high demand for ICS or gas stoves). Still, it is observed that (mentioned above) in the region. These improved cookstoves (ICS) considering 20% of the households were using hot aspects can be considered as main reasons the high number of households (among water for economic activities, such as dairy why these technologies and measures those only using a TSF) that stated they production or provision of rural tourism are not yet used in the region. These were affected to a certain extent by the services. For this household sector, the idea challenges are summarised below along smoke associated with its use (Picture 3, of acquiring a device which could save them with suggestions for overcoming them. Figure 1) and the high importance the time and money while heating water is very households gave to improving health as attractive. However, more information Household’s low acquisitive power a reason for investing in warm comfort about water supply in the region is needed improvements. to assure the viability of this technology. The low monthly income received by a A high percentage of the households high number of households makes it diffi- interviewed indicated that they would Low potential demand cult for them to pay up-front for the warm prefer to purchase an ICS rather than a comfort improvements needed, even when gas fueled stove, which are also popular PHM- Efficient windows: Although the considering more affordable solutions. among the households sampled, since it field study revealed that most of the houses The use of micro-finance might be a suit- would allow the household to continue do not have enough windows to assure a able solution, especially considering the using firewood and dung as main fuels. As comfortable level of natural lighting and strong local presence of micro-finance this household sector receives particularly ventilation, the satisfaction level with the institutions observed during the field mis- low income and those fuels are mainly parameter ‘windows’ was qualified by most sion and their vast experience in serving obtained for free (contrary to gas) it households as moderate (Figure 2). Because these household. is believed that this particularity will of this perception, just a few households increase the demand for this device. indicated they were interested in improving Absence of adequate suppliers their windows. Still, the dissemination of Medium potential demand efficient windows is believed to be highly It has been observed that in the region there beneficial, not only for insulation purposes, is a weak presence of adequate suppliers TU- Solar water heaters: An analysis of but also for improving the lighting and for the recommended technologies and the household’s energy practices showed indoor air quality of the house. passive house measures, particularly a that almost none of the households had TU- Passive or active space heater devices: lack of suppliers with capacities to work a specific device for water heating (solar, Despite the cold weather conditions, with low-income markets in remote electric or gas based water heater) with most only 2% of the households interviewed communities. This barrier could be households simply using the same device for owned a heating system, including passive overcome by proportionating potentially water heating as they do for cooking (mainly systems (Trombe Walls) and active devices interested suppliers with assistance to
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Picture 3: Interior of a Peruvian house showing the effects of smoke associated with the use of open fire (Source: Mariano Ribas, MEI)
84% make adequate its services for reaching this type of customer and possibly linking them with locally present micro- finance institutions in order to share Huancavelica, the next step of the project Authors’ profiles responsibilities along the supply chain. will be to assess the possibility of establish- ing a market supply for those technologies Mariana Jiménez is a recent Household’s lack of awareness and housing improvements which identi- graduate from the MSc. fies demand in the region. Afterwards, Environomical Pathways for Field research results suggested that there the feasibility of using micro-finance as a Sustainable Energy Systems from the Royal Institute of Technology, is a lack of knowledge in the community viable way for households to gain access Sweden and the University of about the importance of warm comfort to the improvements required will also Science and Technology, Poland. and the availability of adequate options be analysed. Finally, if viable conditions She is a researcher assistant at for heating their houses in an affordable are found, close work with suppliers and MicroEnergy International, Germany, and efficient way. This is especially high- micro-finance institutions will be necessary and is developing her master thesis lighted by the low percentage of house- to establish the green loan scheme. on the implementation of warm holds that knew any type of heating sys- comfort improvements among rural tem and the high number of households households in Peru. that considered, for instance, blankets as References Lukas Kahlen is a Project Manager at a proper ‘heating system’. Therefore, an MicroEnergy International, Germany, awareness raising campaign is definitely American Society of Heating, supporting micro-finance institutions recommended, particularly if aiming at Refrigerating, and Air-Conditioning on implementing green energy disseminating technologies such as solar Engineers (ASHRAE), 2013. programmes. He focuses on green water heaters or space heaters. Standard 55-2013-Thermal micro-finance strategy development, Environment Conditions for Human entailing the design of green credits, Conclusion Occupancy. American Society of energy technology identification Heating, Refrigerating, and Air- and selection, and stakeholder’s Conditioning Engineers Inc: Atlanta. mobilisation and coordination. To Overall, the results of the research study date, he has managed projects in Capital, 2015. ¿Qué posibilidades show that there is a potentially high different regions, aiming to mobilise hay de incrementar el sueldo mínimo demand for housing insulation measures, and support financial, technical a 1500 soles? Available from: www. among several households sectors, and and scientific actors providing capital.com.pe/ for ICS among those households that households and micro-entrepreneurs currently rely on an open fire stove for Oficina de Enlace del Congreso with reliable, affordable and covering their energy needs in terms del Estado, 2012. Enlace Regional: sustainable energy solutions. of cooking, water and space heating. Especial Huancavelica. Oficina Additionally, there is a potential demand Técnica de Apoyo a la Mesa Directiva Acknowledgements de Enlace con los Gobiernos to disseminate solar water heaters, space Regionales y Locales: Lima. heaters and efficient windows, however The authors acknowledge funding households’ interest in these items is Practical Action, 2014. Poor People’s support from Deutsche Gesellschaft considerably lower, mainly due to the Energy Outlook 2014. Practical für Internationale Zusammenarbeit lack of awareness on the benefits of such Action Publishing: Rugby. (GIZ) for the development of this study as well as their collaboration products. Save the Children, n.d. Where we for the publication of this article. Other barriers identified to successfully work: Peru. Available from: www. disseminate warm comfort improvements savethechildren.org.uk/where-we-work in the region are the low purchasing power The International Fund for of the households and the lack of adequate Agricultural Development (IFAD), suppliers with the skills for covering low- 2008. Climate change: building the income markets. Nevertheless, it is believed resilience of poor rural communities. that those challenges could be overcome by Available from: www.ifad.org/climate working with the different stakeholders in strengthening their capacities and potentially www.HEDON.info/AAYB integrating micro-finance, marketing and customer care in the supply chain. * Additional pictures In order to achieve successful dissemi- nation of warm comfort improvements in Meet us @HEDON
Boiling Point. ISSUE 67 — 2015 39 GLOBAL HOUSEHOLD ENERGY NEWS NewsGlobal Household Energy
StovePlus Academy 2015 Ghana: DFID: Partnership event on Energy Africa Distribution and Marketing access campaign On 20 July 2015, Minister of State for International During the week before the Global Alliance for Clean Development, Grant Shapps, hosted an event at the Shell Cookstoves Forum (2-6 November 2015), StovePlus, a Foundation aimed at building partnerships in advance of the programme by GERES, will welcome 20 African cookstove launch of the Energy Africa access campaign. The event was entrepreneurs in Accra, Ghana, for the second season of the attended by around 100 participants from a wide range of StovePlus Academy, which will be held both in French and backgrounds – government representatives, private investors, English. The objective of the StovePlus Academy is to increase solar entrepreneurs, NGOs – all of whom have a role to play continent wide collaboration and knowledge about the industry, in delivering the campaign objectives. The Energy Africa to strengthen African entrepreneurs’ capacity to improve their access campaign is focused around the market-based delivery businesses and to contribute to the overall commercialisation of off-grid energy to households - increasing the availability of energy efficient and clean cooking devices across Africa. and uptake of solar products. Participants at the event were This year, the StovePlus Academy trainers, consisting of invited to join one of three breakout sessions - on Policy and international stove experts and local stove businesses, will help Regulation; Finance; and Research and Technology – and to participants improve and develop distribution and marketing discuss, not only the barriers that are preventing household strategies that can be realistically and successfully applied to access to electricity for the poorest in Africa but, importantly, their businesses and associated partners. Moreover, given the how these can be overcome. To find out more on the outcomes high demand, StovePlus aims to launch the Academy in Asia to of the event and participate in the on-going discussion, please meet the needs of entrepreneurs in the Asian cookstove sector. contact: EnergyAfrica_access@dfid.gov.uk For more information, please visit http://cleancookstoves.org/ events/180.html or contact our team at: [email protected] Worldwatch Institute: Harnessing the Dominican Republic’s sustainable energy IRENA: New report highlights synergies resources between renewable energy and energy efficiency Currently, the Dominican Republic depends on fossil fuel imports for 86% of its electricity generation, bringing The interplay between energy efficiency improvements and enormous economic and environmental costs. In 2011, the the deployment of renewable energy technologies is complex. Dominican Republic spent 8.6% of its GDP on fossil fuel If the respective potentials in these two fields are combined, imports and an estimated 85% of citizens received a subsidised total global energy demand can be reduced by up to a quarter electricity billing rate, costing the government US$ 1 billion. by 2030, IRENA and C2E2 find. Energy efficiency measures The reliance on fossil fuels for power generation also results would account for half to three-quarters of the total energy in high local pollution and healthcare costs and contributes to savings, with renewables delivering the rest. Demand reduction global climate change. The government is considering phasing through renewables depends on adopting modern technologies, out the use of petroleum for electricity—which currently including efficient cookstoves that increase conversion efficiency accounts for over 40% of generation—by increasing imports 2-3 times, electrification equipment like geothermal or air heat of coal or LNG. In this Sustainable Electricity Roadmap for pumps that deliver 3-4 times their power consumption in the the Dominican Republic, the Worldwatch Institute conducts form of heating or cooling, and power sources like solar and the technical, socioeconomic, financial and policy assessments wind that require no thermal conversion and therefore waste needed to create a smooth transition to an energy system that no fuel. Quantitative analysis in the report used data for eight is socially, economically and environmentally sustainable. countries – China, Denmark, France, Germany, India, Italy, the Download the roadmap @HEDON. United Kingdom and the United States – covering half of global energy use. The full report can be accessed @HEDON.
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40 CALL FOR PAPERS Call for papers Boiling Point forthcoming topics: — Energy in Emergency Settings
Boiling Point is peer reviewed and published quarterly. We invite be: of good quality format and suitable for readers to submit articles, papers and news on a rolling basis at any high resolution colour printing (minimum time. So if you feel that you have something to contribute to the wider resolution of 300 dpi and a high quality household energy community on any theme, including the above four, file type i.e. not .bmp); sent to us in its original format (not pasted into an MS then please read the information below and send us your experiences Word file); credited to the correct person, – HEDON would love to hear from you! with a caption if appropriate; owned by the person/organisation entering the competition; and preferably with a central Boiling Point looks for articles which are reports. Please note: technology based focal point, bold composition and rich written in English, preferably using clear articles should be focused on the real life colours. The editor’s decision is final and and plain language, and which can be used application of proven technologies. the selected photo will win absolutely by other people in their own work. Do not nothing, apart from the admiration of be deterred, however, if you are not used Helpline thousands of subscribers and of course to writing – it is the information that is Would you like advice from experts on an our thanks. important – we will review articles, edit aspect of your work in household energy? them and return them for your approval Contact us with your questions and we Guidelines and submission dates prior to being published. will strive to direct you to those who can We are now accepting front cover help. Questions we feel are relevant to a photo submissions for BP68: Energy Theme articles wider audience are selected for publication in Emergency Settings. Deadline for Each edition of the journal typically contains in the Helpline section of Boiling Point. In submission is 15 November 2015 (visit four to six full length theme articles which the past, these have included dilemmas www.hedon.info/boilingpoint). can include research papers and programme regarding marketing, emergency relief and We are always looking for general reports that are relevant to the theme topic. enterprise development. articles which should be submitted via We encourage you to submit articles on email to [email protected]. Articles your work on any of the above-mentioned Sponsor should be around 2000 words in length. themes at any time of the year. Each edition Boiling Point reaches over 11,000 readers Illustrations, such as drawings, photo- also contains a related Toolkit. If you are globally, making it an ideal forum to get graphs, graphs and bar charts that are interested in contributing to these, then information about your project activities essential, and all references should follow please contact us on the email address at the out to the worldwide community of the given guidelines. Articles should also end of this page. practitioners and to showcase your work include a 100-200 word summary, a 50 to potential collaborators and funders. word profile for each author and up to ten Viewpoints Sponsoring Boiling Point gives your keywords that you feel best describe your If you feel you or someone from your organisation a range of profile benefits; article. Files can be emailed to the editor organisation should be interviewed on from space in the journal to communicate at the below listed address. Final selection your work in facilitating access to energy news, events, logos and website links; is based on article quality, originality and for households in developing countries, to receiving several printed copies to relevance. please contact us. All interviews will be distribute to your colleagues. For more Thank you for your cooperation, and published on the HEDON website and the information, visit www.hedon.info/EYQB please do not hesitate to contact us for best will be selected for publication in the or send us an email. any clarification. Viewpoints section of Boiling Point. Front cover photo competition Regards, General articles HEDON is offering you another fantastic The Boiling Point Team We welcome submission of general articles opportunity to get your best image onto at any time, which can cover any topic. the front cover of Boiling Point. We are Examples include project/programme looking for a full colour photograph for Email: [email protected] updates, technical papers, book/report the front cover that illustrates the future reviews, and conference and workshop themes of Boiling Point. The photo must
Boiling Point. ISSUE ISSUE 67 67 — — 2015 2015 41 A PRACTITIONER’S JOURNAL ON HOUSEHOLD ENERGY, STOVES What the AND POVERTY REDUCTION HEDON Household Energy The HEDON Household Energy Network is dedicated to improving social, economic and environmental conditions in less Network developed countries, through promotion of local, national, regional and international initiatives in the household energy sector. offers:
The HEDON Household Energy Network Dick Jones (Independent) and Boiling Point is established in the UK as a charitable Kavita Rai (Energy Specialist). The www.HEDON.info/ limited company registered with the UK network itself is comprised of thousands Boiling Point Charity Commission. It is goverened by of active members with diverse seven Trustee Directors: Grant Ballard- backgrounds: practitioners, policymakers, UÊ 67 issues over the past Tremeer (Eco Ltd), Andrew Barnett (The academics, business owners and non- 33 years Policy Practice), Raffaella Bellanca (SNV), governmental organisations, based across Jack Dedman (Chartered Accountant), the world. We exchange experiences, UÊ Free online access and Ben Garside (International Institute learn from one another and create new subscription to receive for Environment and Development), knowledge. printed journal UÊ Opportunity to showcase your organisation’s Our Vision Our Mission activities and logo as a sponsor to thousands of A world where everyone has access To inform and empower practitioners in readers order to unlock barriers to household to clean and sustainable energy; An interactive web in fairness, respecting the energy access by: addressing knowledge environment and combating gaps, facilitating partnerships and platform offering: fostering information sharing. climate change. UÊ A global community of registered members www.hedon.info/ Our Patrons Community
HEDON Household Energy Network has the good will and support of two patrons: UÊ The latest news, events Archbishop Desmond Tutu of South Africa, and Professor Kirk R. Smith, Professor of and funding opportunities Global Environmental Health, at the University of California, Berkeley, USA. sent to members via a monthly e-mail newsletter www.hedon.info/news “As a patron, I believe that HEDON, in its work to address energy and climate improves lives for people living in poverty. UÊ Discussion forums I am a supporter of their work and would recommend others www.hedon.info/SIGs to support their endeavours further” UÊ Regional Interest Group Archbishop Desmond Tutu meetings www.hedon.info/RIGs “HEDON is the oldest international network of organisations promoting UÊ Comprehensive databases clean and efficient household energy sources for improving health and on cookstoves and welfare. I have been involved since its inception in the 1980s and it biodigesters has provided both intellectual support and inspiration in my work to www.hedon.info/ understand the health and climate implications of household combustion” Databases Professor Kirk Smith
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