Leapfrogging to a renewable future.
The devastating typhoon that hit Mozambique in March 2019 gave terrible support to the widespread expectation that poorer nations will suffer from the impacts of climate change most. The reasons include poor infrastructure, the absence of social safety nets, limited financial resources, and often tenuous public order. Poor rural dwellers depending on subsistence agriculture can’t count on crop insurance or government bailouts. Floods and storms add to the pain from water and insect-borne diseases, which are likely to increase and spread to new areas.
As the challenges from climate change mount, building resilience to its negative impacts may be more important than trying to get the world’s poorest nations to cut back their emissions. The nations of Africa, in particular, have contributed little to anthropogenic climate change, and it’s quite possible that Africa will move forward with continued low emissions, especially in the realm of electrification.
Climate Change and Renewable Electrification
Africa has the opportunity to leapfrog the carbon-intensive centralized development process and move straight into distributed electrification — especially through on and off-grid solar and wind power. The International Renewable Energy Association (IRENA) estimates that 60% of Africa’s electricity needs could be met through renewable off-grid solutions.
Indeed, the majority of renewables development is now taking place in non-OECD countries. In 2017 this amounted to 94 GW of installed wind and solar globally — twice what was built in new coal plants that year.
As electricity continues to spread, Africa would surely benefit from its own green new deal. But there’s a real need to develop a trained workforce to fill the gap in skilled labour in the clean energy sector, to take on the skilled work of developing, building, and maintaining solar and wind projects, microgrids, and storage and local distribution systems, for the hundreds of millions of Africans who still lack access to electricity. Of course, as electrification penetrates further, it opens up many more new opportunities in a wide range of businesses, including IT, communications, and remote work.
To now, most renewables development has taken place in wealthier African nations like South Africa, Kenya, and Uganda, and most commerce is happening in the cities, again among wealthier Africans. Not surprisingly, business is going where the money is. According to Gogla — the global association for the off-grid solar energy industry — most sales of off-grid lighting are similarly concentrated in Kenya, Uganda, Ethiopia and Rwanda.
That means that for now the poor rural populations are largely left out, even while they could benefit most from even the most basic of off-grid technologies like lighting. Gogla notes that families with solar systems very often see an increase in income, while small businesses find new opportunities for efficiency and customer service. In addition, solar powered lighting expands opportunities for income generating work and education at home.
Local clean energy systems can also help build individual and community resilience, particularly by providing water for drinking and irrigation. And they have a positive impact on health and cleanliness, by reducing indoor air pollution from kerosene lamps and improving access to clean water, communications, and health care.
Putting the Leap in Leap-Frog
So the question is, how are poor communities going to gain access to these beneficial technologies? How are they going to be financed and built? And how can this be done without imposing the trappings of multilateral debt and the spectre of privatization, austerity, and neocolonial exploitation? How, that is, can the world’s poor reap the benefits of an autonomous energy modernization leap-frog?
Well, businesses are not entirely asleep at the wheel, and the growth of pay-as-you-go has gone a long way to proving the benefits of clean, modern energy. Gogla represents 130 firms, most of which it seems are using a PAYG model. PAYG grew at an average annual rate of 140% between 2013 and 2016, and was the model used with 80% of solar home systems sold in 2016, according to the World Bank statistics.
But the very poor are still generally seen as too high-risk, and high cost (i.e. in reaching scattered rural villages) to be attractive for traditional entrepreneurs. These markets are often left to charities like Solar Aid, founded in 2006 to provide access to solar lights in Uganda, Malawi and Zambia, and to help catalyse solar markets and eradicate the kerosene lamp.
SolarAid’s charity work is largely educational, and the corresponding high cost of sales is what turns for-profit companies’ attention elsewhere. SolarAid’s “teams travel thousands of miles — spending days with local community members — sometimes only selling a handful of lights. Because that’s what it takes to help people leave the darkness behind.”
Another novel approach is SolShare, a Bangladeshi start-up that is developing local micro-grids “from the bottom up,” to enable the 3–5 million solar-powered homes there to trade electricity, even with neighbours who don’t have their own solar panels. This a truly localized peer-to-peer trading within the “last mile” of power distribution infrastructure. The SolShare network also generates a potentially valuable set of data on production and consumption patterns, and on how such a trading system functions.
AfricaGreenTec (see images) is another group that provides electricity — and with it, clean water and internet connectivity — to whole villages. The key is their portable Solartainer — a solar power plant that unpacks like a high-tech butterfly from its shipping container cocoon.
While bringing all the benefits of distributed solar to some of the poorest and most remote communities on the planet, AfricaGreenTech, SolShare and others also hold the seed of a much bigger shift.
The next leap: Data-Driven Tokenization
For some months I’ve been working with innovators at Freeelio, especially around TheSunProtocol and the Electraseed Fund. These projects are creating ways to expand rural renewable electricity, and make it self-sustaining, through the application of blockchain technology and the drive of data valuation.
While SolShare and Africa GreenTec have shown how power can be provided, Freeelio sees an opportunity to use blockchain and the token model to build incentive structures that enable autonomous social development through a meritocratic token distribution. TheSunProtocol, for instance, not only sees tokens being used to purchase electricity, but also aims to reward consumers for their productive electricity uses — amplifying, if you will, the economic returns on their activity.
TheSunProtocol token provides a redeemable means of exchange, as its value (in kWh) remains constant. The token can be separated from the electrical supply; users could use the tokens to pay for a haircut or groceries, while their merchants could then exchange the tokens for electricity. The token could even be used in exchanges between users in separate villages, thus building an economy of value harnessed from the sun itself. This would be a leap far beyond what typical development experts typically prescribe, and reflects a far more sustainable economic vision for the future — one in which environmental and social values are reflected in something like a Quality-Adjusted GDP.
Such a leap requires a takeoff point, and for now, that means the hardware, the education, and the technology development, needs to be financed, and that demand falls on donors or investors from wealthier nations.
How can it be made easier for such investors and donors to be part of these initiatives? One of the big and quite reasonable concerns of financiers is in ensuring that the money they invest is achieving the returns they set out to achieve, whether these be monetary, or in the social and environmental sphere (ESG). Smaller or distributed projects are less “bankable” in part because the money can be hard to track, and the returns difficult to measure and capture. They also carry some risk (not absent from larger projects) of money being misdirected or connected with criminal activities, especially if KYC regulations have not been followed through the entire flow of funds.
It’s here that the ElectraSeed Fund can allow blockchain and especially smart contracts to shine. As an energy data-driven investment platform, the ESF invests in a pool of solar energy assets worldwide. It too uses smart contracts to improve data integrity and transparency, and to thus open up the scope of positive impacts for donors and investors. ElectraSeed Fund smart contracts can track investment funds down to the individual user and kWh. They may even be able to characterize the use of the kWh — in other words, the specific sorts of activities the electrical gifts support.
The Electraseed Fund is thus designed to enable investors to see precisely how their investment is performing, especially in the ESG calculus, even while the Fund pools investments across a range of projects to reduce risk. Companies that seek to offset carbon emissions, or that want to verifiably achieve targets within their own ESG commitments, can access secure data on the results on the ground, half a world away, in real time.
The Electraseed Fund is building relationships with host-country entrepreneurs like SolShare, to help ensure local uptake and reliability. Meanwhile it’s engaging with western firms looking to build their ESG returns, and that want to find ways to better validate their investments.
Another interesting model, called Energy Solidarity Token, entails the western company donating cost savings achieved through energy efficiency measures to purchase electricity to give away through the SolShare model. This allows the firm to leverage its investment to achieve environmental and social goals where they are most needed.
Blockchain and decentralized renewable energy constitute a major leap for electrification among the world’s poor, but the path ahead is promising. While the footprint is still small, it suggests huge potential to improve lives in Africa and South Asia, where hundreds of millions still lack electricity.
A leap like this might not ultimately do a lot to reduce emissions or slow climate change, but these initiatives can make a big improvement in the lives of the world’s poor, who in any case need to figure out how to live under changing climate conditions. Electricity, clean water, and communications connectivity are key elements of a resilient local infrastructure, and a radical localization - not just of energy but also food, water, and economic and commercial infrastructure - may well be what it takes to ensure rural Africans and others can continue to create and produce, to thrive in the pursuit of their goals, and to grow with their families and their communities.
Are you interested to learn more about these opportunities and support? Leave a note in the forms for the research venture TheSunProtocol, pilot of Electraseed Fund, and Energy Solidarity Token.
