Scaling clean energy innovation: the Ashden International Conference 2017
Ashden are one of the world’s leading sustainable energy charities — and one of our longest standing clients. They support hundreds of projects across the globe that bring new and innovative solutions to change the way we consume and generate energy. They are looking to accelerate the shift to a low carbon world.
This year’s conference focussed on the topic of ‘Scaling clean energy innovation’ — looking at expanding markets, reaching new places and developing capacity.
You can see a full list of the Ashden Award winners, on their website, that we recently designed and built at www.ashden.org
In the markets that Mobisol work in, 80% of people don’t have electricity — they have been waiting 20–30 years for the grid to arrive. Unfortunately for them, the reality is that it is not economically viable for the big energy providers to bring cables to these regions. The people in these areas want the same thing as we do — to power a TV, fridges and charge their mobile phones and thus far solar solutions have not enabled this.
Mobisol are bringing a sustainable solution to meet this need. Their products power mobile phone charging stations, run sewing machines and barber shops. All of these situations allow the individual to make more money from their solar generation than they cost to buy, by selling their spare electricity to their local community. Mobisol based these products on the needs of their customers by speaking to them, rather than imagining solutions from London, Berlin or LA.
They have even been able to develop a welding machine that runs off power generated by solar — despite being told it would be impossible by everyone they spoke to. This has allowed one of their clients to strap the batteries to their motor cycle and become a mobile welder powered by the sun. This means he has a competitive advantage over his rivals who need to have, and pay for, property to base their workshops in.
None of these solutions were imagined just 10 years ago and are now changing the way that all sorts of sub-Saharan African businesses are able to trade. These types of advances, which work for the individuals and the businesses involved, are the only way that lasting change will come to the developing world.
It costs $30-$40 / month to run a Diesel pump which farmers need to help irrigate their pumps across Africa. The Futurepump SF1, which is powered by the sun, costs $650 and hence pays back to the farmers in about a year and a half. In addition, farmers who purchase it, can lend it to their neighbours for an additional income stream.
86% of their Futurepumps’ customers never need to spend money on pumping water again.
The pumps are designed to be simple, easy to use and can be maintained by the farmers themselves — rather than having to call someone in to fix it for them. The SF1 is the 5th generation of the product and is continually being updated based on the insights received from people who are using it on the ground.
Panel 1: Disruptive innovation and opportunities for clean Energy
In Nigeria, there are 18million small generators are operating — powering TVs, fans and light — each consuming 5 Litres of fuel every day. The industries that power these generators are heavily invested in the market and have little reason to change. The government of the country also have deep relationships with these companies giving tax breaks and preferential treatment across the board. Changing these paradigms will take a long time, but it will only happen by starting with small solutions that can help a lot of people.
In Kenya’s tea industry, much of their centralised infrastructure fell apart years ago. However, the farmers came up with their own solutions, which now allows it to be one of the most profitable industries in the country. This shows that power bases and approach can change — they just take time.
Realistic political desires need to be accounted for when working in developing markets. Local politicians are looking for votes at election time, and have gone to such lengths as giving away solar power systems — causing difficult conditions for a sustainable business to thrive. However, there is a possibility here to grow supply. Electrifying the continent could take 11 years — with current technology and financing according to Mobisol. Political will is one of the main factors stopping this.
“Out of 950 households that were shown the Mobisol system, 902 wanted it — the demand is there, generating access is the challenge.”
Pay as you go solar now has 650,000 households across Africa — the potential is there and starting to be realised. A move from micro-grids to individual, decentralised, household solutions seems to be underway. It is likely that there will be a role for a number of solutions — some providing traditional grids on a small scale, some putting the power of generation in the hands of users.
Governments will have a role in helping socially responsible businesses to get to the hardest to reach communities, which they wouldn’t do otherwise. The Tanzanian government have provided incentives which pay on results — an attempt to generate interest without distorting the market. This is ironic considering that the on grid market is so distorted by governments!
If you want to help generate access, you need to be able to provide local financing to companies on the ground. Otherwise there is a huge risk when it comes to foreign currency exchanges — possibly costing £500k on a £10m loan.
Change is happening in East Africa right now. At the moment though, this is largely happening under the radar. The next step is to get governments on board and that’s where things get tricky, due to all the vested interests. Successful stories from the types of products that Ashden supports, will be the things that generate interest and credibility whilst convincing communities to change.
According to DIFI, the step change has been pay as you go solar models, which are affordable by consumers in Africa. Linked to mobile phone plans, these financing options have driven access like nothing else.
Arguably the solar technology is already there. The innovation needs to come from engagement with government to drive access and working with finance to improve individual affordability.
All across East Tajikistan electricity is needed to run the modern appliances of individuals, families and businesses. In order to help meet this need, the government has now handed control of its electricity production to commercial operations — whilst providing financing and guarantees to help rehabilitate their facilities.
During the Soviet government, 60% of electricity production was through subsidised Diesel. In the 90s, following the collapse of the Soviet Union, the country went into an energy crisis. 70% of the country’s trees were lost, due after being burned for heat and light.
During the 90s, the infrastructure that had existed previously was left to decay, with no investment from either government or companies. At the same time, across the country, people were demanding cheap or even free electricity — as they were used to receiving it as part of a socialist society. The average Pamir tariff is $6.4 / month, the lowest in the world, but even that is considered expensive by their customers.
Pamir has so far restored 11 small hydro power plants and upgraded 4300km of old transmission and distribution facilities in East Tajikistan. In 2027, the aim is to hand back these facilities to the government, so that they can become part of the local infrastructure for the next 20–30 years.
Pamir’s shareholders do not just look at their dividends in terms of finance, they are also looking at the quality of life that their company is able to establish within the Tajikistan population. They are just as interested in the facts that small business success has tripled, new education has taken a foothold and women’s rights have improved as they no longer need to go out and hunt for wood.
PEG Africa is the largest off-grid solar company in Ghana, as well as a driving force for pay-as-you-go solar energy in West Africa, distributing solar home systems to the country’s most remote areas. Solar home systems are sold on credit, which customers paying back gradually, through their mobile phones — usually over the course of a year.
20million people have no access to electricity in PEG’s primary markets. The only way to viably offer this service to someone earning on $1–5 dollars is through credit and finance. By creating a metering system that only allows energy to flow if the customer pays their bill, you are able to reduce the risk to the commercial entities putting in the up front investment.
PEG concentrate on licensing the best technology from other suppliers and have grown a local network of representatives that service and sell their products in communities. This helps to overcome some of the challenges in East Africa — in particular the lack of mobile payment penetration in the region. By being aware of the local convenience and economical challenges which this brings, their customer service agents can provide better solutions for people.
By creating a system where PEG customers are rewarded for being good ‘payers’ they incentivise people to pay off their loans as quickly as possible. They then use this distribution channel to offer future loans for products which their customer want, such as mobile phones or health insurance.
Panel 2: Accelerating expansion to new geographies
Mobile money has transformed the way that Kenyan society works. You can now pay for almost anything using services such as M-Pesa and it has allowed access to all sorts of financing inclusion for the population. In Kenya this was driven by the lack of understanding of regulators, a desire for security from people to keep their money away from their homes and a strong promotion campaign from the one company offering the service. Adoption has been slower across the rest of the continent and no one is quite sure why.
Pamir found that working with the community to change behaviour was a big driver of success. They helped people understand how to conserve energy at home and to insulate their housing more effectively — reducing both their costs and the amount of electricity required.
There is a need for ‘risk money’ to explore and test which technologies and business models are viable for scaling.
Anti tamper technologies and the ability to cut off customers if they don’t pay are built into Pamir’s operating model. They temper this with subsidies from the government and systems that ensure struggling families don’t get cut off in the middle of the winter.
There is a perception that theft is a big problem in developing markets. For Mobisol, with 80,000+ units in the field, only two have been stolen — one of which was from a roof in Berlin!
The poorest people Nepal, those earning under $700 / year, spend over 20% of this income on Kerosene and basic lighting. Due to society’s inequality, this is problem is most keenly felt by the women of households.
Empower Generation exist to help these women to become clean energy sales agents. They provide the tools, the training and the supplies to help them become viable businesses in their own right, by being distribution channels into ‘the last mile’ so that these products can be used on the ground, in family homes.
These businesses provide lasting change in their communities, by helping people to use sustainable energy products, whilst generating value for small businesses. To date they have sold over 55,000 products and have 23 entrepreneurs who are becoming energy leaders within their communities.
Part of the reason they have been so successful, is because they understand the challenges that a woman will have in implementing these products into their homes — having faced them too. This means they can provide solutions which others couldn’t.
Next year they hope to expand to 100 women CEOs to further grow their impact.
Haileybury Youth Trust (HYT)
In 1900, nearly half of Uganda was covered in trees and forests. Now, only 10% is. This is largely down to the use of firewood in the firing of traditional bricks. HYT exist to tackle this growing environmental disaster, by using interlocking blocks made from stabilised, compressed earth: a low-cost, carbon-saving alternative to the environmentally damaging fired brick.
Skills training and capacity building are at the heart of their approach. With one of the fastest growing populations on earth, skills and future careers are in high demand. In addition, so are buildings to house families, whilst preserve Uganda’s delicate environmental balance. HYT aims to meet both of these needs locally whilst generating employment and economic sustainability.
HYT engages with communities on the grown to help them understand the environmental issues of the fired-brick. By training cohorts of skilled, loyal, young men in interlocking brick technology and construction techniques, they are then able to give the communities the tools to make the necessary changes.
Panel 3: Developing local skills & capacity
HYT started as a training project, and have expanded into a social enterprise which is used by other NGOs to build various premises and buildings using their technology and workforce. They see this as a model that can scale and move into other markets to extend their impact and reach.
The Empower Generation team are looking to become the leading supplier of renewable energy services in Nepal. They are trying to do this with a completely non-traditional business model — but one that has proved its success and potential.
Some policy makers are starting to understand the opportunity for addressing the skills, training and employment gaps by looking at them together. By training people in emerging industries, you give them skills and help them to find employment which supports the local community. In this circumstance everyone wins, including the government whose economy begins to develop.
There’s a careful balance for emerging organisations, between training and the focus on selling products. Those that are successful, will often have a strong consideration of the human element of their system. This is essential in the sustainable energy market, where companies are trying to change behaviour just as much as sell a product. Training can help reduce risk and increase the profitability of these organisations.
“We compete with subsidies by providing a higher quality service and product.” Empowering Generation
The biggest public bike share scheme in the world, has 85,000 bicycles and there are 115 million hires per year, and increasing. 96% of these are free — as they are for less than 30 minutes.
Hangzhou’s cycle scheme has become a highlight of visiting the city, whilst providing significant benefits for the local population — saving time, reducing pollution and providing low cost ‘last mile’ travel.
By taking advantage of the existing cycle lanes within major Chinese cities, and integrating with other modes of transport the scheme has been a run away success — far exceeding similar programmes in Paris or London.
The same pre-paid electronic cards that are used across the whole transport system (including taxis), are used to rent the bikes. This, combined with a focus on providing support for their customers has given the scheme a reputation for ease of use and simplicity.
So far, 2.3 Billion km have been ridden, with many more to come.
50% of the energy in India is consumed by large industrial buildings. In a country where a third of the population can suffer from power cuts lasting several hours, this innovative Indian start-up is addressing the need for demand-side energy management.
By tackling the problem of energy supply at the client side, they are saving businesses significant resources whilst reducing the overall impact of the country’s energy needs.
Ecolibrium’s big data energy analytics platform, SmartSense, is helping more than 750 commercial and industrial consumers and utilities in South Asia to save up to 15% of their energy and asset maintenance costs.
The system integrates with existing infrastructure, and provide a range of solutions — providing a system that can meet the needs of any business, big or small.
By doing so, Ecolibrium hope to help those with power, and the 240million Indians without access to electricity.