Financing the Future: Accelerating investment in inclusive, sustainable energy systems — the Ashden International Conference 2018

James Gadsby Peet
Jun 13, 2018 · 14 min read

Across the world there is an ongoing challenge relating to the financing of technologies which will drive us toward a low carbon future. Often the technology exists, but can’t make its way to the last mile as people can’t afford the up front cost.

Ashden and their Award their winners are dedicated to accelerating the shift to a low carbon world and their conference looks at all the ways we can help make this happen.

They are also one of our longest standing clients and the most dedicated team you could find. You can see a full list of the Ashden Award winners, on their website at www.ashden.org


Bloomberg New Energy Finance

The headline sponsors of the conference, gave us some top level stats about the clean energy market:

  • 8 years in a row, there has been more than $250B invested in clean energy
  • $49B was invested in small scale solar last year
  • Since 2012, the balance of clean energy investment has moved to Asia — $187B of the total $250B invested in 2017
  • The cost of Solar PV electricity has dropped about 80% in the last 8 years

Chhattisgarh State Renewable Energy Development Agency (CREDA)

CREDA had humble beginnings in the rural parts of Chhattisgarah — providing off grid solar power for primary health services and hospitals. The reliability of their service enabled a transformation in the patient care that could be provided.

80,000 patients benefit in CREDA health centres each day

From lab equipment to reception computers and to sonography machines this 24/7 power had enabled a step change in how these centres operate. By driving forward equipment functionality and in turn water supply it has allowed sites to keep their best staff and provide more services to patients.

The supply of this electricity has proved so effective and reliable, it has now been moved into towns and cities where it outperforms the grid.

MASS Design Group

MASS is a global design collective, that considers how any building they create is going to impact the entire environment in which it operates. Starting with the users of the building, they consider how every aspect can be built to be more sustainable. From the initial vision to planning and design to the eventual construction, their aim is to create a collaborative process that respects human dignity.

88% of construction costs are spent regionally across MASS’ project portfolio

Local materials are used and local people are trained in any craft that they want to create the building. The result of this is a facility that has a sense of shared ownership and extremely low embedded carbon footprints.

MASS’ projects have served nearly 220,000 people to date

Each project starts with a mission, the immersion of their team into the environment and aims to deliver a beautiful building which fulfils people’s ambitions. A full impact assessment is an integral part of each project and nothing is seen as complete without metrics that demonstrate the mission has been completed.

Collaboration for impact Panel: Bottom-up, integrated approaches to financing energy access and community services

Sanjeev Jain, Chief Engineer CREDA
Christian Benimana, Director — Rwanda Programs, MASS Design Group
Lucy Stevens, Senior Policy and Pratice Advisor, Practical Action
Jem Porcaro, Senior Director for Energy Access, UN Foundation

  • There are large scale systems that need to be changed to really shift the switch of energy to low carbon clean energy.
  • Evidence, Inter-sectoral Planning and Finance are the 3 areas that the UN Foundation are focussing on to bring about this system change.
  • Evidence — no one can tell you how big the energy gap and hence the problem is. This leads to a real challenge in how to frame the challenge to decision makers in order to get their buy in. Without data, it is also very difficult to convince investors to bring their resources to bear on the problem.
  • CREDA convinced their local governments by showing them small scale examples and used them to prove the impact that their approach could have.
  • MASS Design have found a challenge in collecting this research where they operate, as many of the tools that are used simply don’t work in the middle of the Congo.
  • Most of the people that MASS Design Group speak to, don’t care that much about the sustainability of their projects. They have a focus on cost over all else. MASS win work by being only slightly more expensive and demonstrating the numerous other benefits their approach brings.
  • The best impact that Practical Action have seen is convincing people who are using diesel generators, to switch them to Solar PV, by showing how they won’t have to go collect fuel.
  • The UN Foundation have found, in a normal off grid health facility, has on average five solar systems, half of which aren’t working. The reliability of these systems, is a huge problem. It is also one which is even harder to fund, given that most governments want to spend money on capital expenditure and not operating or maintenance costs. They believe that a shift to a more service based model for the buying / renting of these systems, could help to address the issue.
  • Driving collaboration between different ministries, is crucial to achieve progress. CREDA are a great example of how to do this, creating joint projects between the ministry of health and the ministry of energy in Chhattisgarh. This sub-national strategy has been seen to be more effective than trying to drive integration at the country level.

Angaza

By providing software to clean energy product companies, Angaza enable organisations of any size to create pay as you go models for consumers. This enables much higher adoption of these life changing technologies, amongst those groups that can’t afford the high up front cost of some products.

There is a loan structure and usage plan for each individual customer, which is captured in the Angaza Hub. This allows individual suppliers to make informed decisions about the people they sell to and how to manage their usage.

Angaza have helped sell 700,000 pay as you go products since 2016

Water pumps, solar lamps and household appliances are taken to market, through last mile sale consultants. By integrating with more than 25 payment providers and providing SMS communications, Angaza allow their distributing partners to provide services which align with how their customers want to pay and engage with them.

Angaza’s business to business software as a service model, has engaged with over 3 million people. As a company, they have seen huge growth and their partners often say that they couldn’t run a business without them. By enabling a new way of financing these life changing products, they are driving communities towards a low carbon future.

Shuttl

Since 1971, the Indian city population has increased by 300%. One effect of this is that those with the least resource, have been left behind in terms of transport. Shuttl addresses this need, by crowd sourcing low cost bus routes, focussing on the busy commuter hours.

Just 3 years after they started, Shuttl now provide 35,000 journeys a day, taking 10,000 cars off the road

The environmental impacts of this are obvious, but equally important are the benefits to the commuter’s lives. By having a safe, air conditioned environment, in which they can have some proper me time, Shuttl wants to get people looking forward to their commute.

Shuttl is saving 2,300 tonnes of CO2 per year

For 100 hundred years, buses have been city’s most efficient ways to transport people. By putting technology in the hands of consumers, and giving them direct control over which routes are used, Shuttl have brought the convenience of a car but with the benefits of a bus system at scale.

This approach generates large scale societal change. By providing a safe environment where everyone can track each other’s journeys, women are empowered to travel on a public transport system. This enables them to take up jobs, or education opportunities that would otherwise be closed to them. Despite only comprising 20% of the workforce, 37% of Shuttl’s users are women.

Digital Innovation Panel: Using data to understand customer behaviour and mitigate financial risk

Leslie Labruto, Global Energy Lead, Acumen
Jane Kimani, Director of East Africa Operations, Angaza
Amit Singh, Co-Founder and CEO, Shuttl
Eleonore Lazat, Analyst, Bloomberg New Energy Finance
Ameya Upadhyay, Principal, Investments, Omidyar Network

  • Less than 1% of farmers have crop insurance in India. This leaves them to be highly exposed to poor seasons — not just financially but also in terms of having enough to eat. There are a number of Indian start-ups that are trying to use satellite data to solve this problem — but are limited by how well it can be analysed locally.
  • Cheap, clean and reliable energy is the aim of the whole clean energy industry. Bloomberg New Energy Finance think that there is a $17B / year in the digitisation opportunity for energy systems.
  • Angaza’s features are completely informed by the needs of their distribution partners. If they do not say they need them, they are not built.
  • Shuttl see that men will travel further to their bus stop than women and in the dark, this gap widens even more. They are aiming to convert each person in their network by using customer data to understand where their stops should operate from. This will take more and more cars of the road and help more people access low cost, safe transport.
  • Through the increasing adoption of digital transactions in emerging markets, banks can understand their customers even better. The combination of this financial activity with mobile behaviour and tracking, further improves this understanding. This gives banks more confidence in offering credit and financing to these individuals which helps drive adoption of more sustainable technologies.

People who keep their mobile phones charged, are more likely to be seen as ‘credit worthy’ by banks — Ameya Upadhyay, Omidyar Network

  • Data portability is a way for new business models to exist whilst also protecting customers. In more mature markets, this is already being seen with regulation such as GDPR in Europe, but is yet to emerge in other parts of the world.
  • Shutl see a variety of different patterns in morning and evening commuting. Many people only use their service in the morning and are picked up by their family in the evening. Others only use their buses in the evening. By being a data centric company, they can develop their routes to fit these different user behaviours.
  • Lack of customer data isn’t the roadblock for investment moving into the sustainable energy market in emerging markets. Customer behaviours are also fairly consistent across the world — why people book airline tickets is broadly similar in Lagos or London. The challenge is how to develop individual products that fit in with the local conditions. As such, the team, the market and market fit are all that Omidyar look for when making investment decisions.

Unlocking blended finance panel: Catalysing investment for universal access to energy

Nico Tyabji, Director of Strategic Partnerships, SunFunder
Abyd Karmali, Climate Finance Executive, Bank of America Merrill Lynch
Richard Gomes, Director — Market Development, Shell Foundation
Dario Traum, Senior Associate, Bloomberg New Energy Finance
Emma Hawkins, Investment Executive, CDC

  • BAML are starting to develop further Credit Enhancement opportunities so that innovative companies can use their financing as the first step on their growth and enable them to raise other ongoing methods of funding.
  • For every $1,000 that goes into clean energy, only $1 goes into small scale off grid products according Bloomberg New Energy Finance. That being said, with the increase in debt financing the signs are good that the industry is maturing.
  • Finance, philanthropy and early stage finance all have their role to play. For BAML, their focus is on the addressable opportunities. For example, $20B is spent on charcoal each year. This is an area which they can focus on and look to offer commercial debt support in.
  • SunFunder see a huge number of enquiries from small companies looking to access debt, at a cost that can enable them to be a sustainable business.
  • Shell Foundation see the Solar home systems market as key to meeting the various worldwide targets. Their calculations work out at the opportunity needs $33B in funding over 10 years — which at the moment the industry would struggle to cope with. There is a particular lack of pipeline for new propositions and products that meet consumer needs to generate value.
  • CDC are focussing on enabling local currency financing, due to the huge risks involved in converting dollars in other models. The challenge they see is the local banks aren’t comfortable in investing with such early stage innovators. In particular, many say it’s illegal for them to give money to pre-profit companies.
  • BAML see their role as a catalytic financier, to provide early stage capital to enable other types of investment to come into the market due to a reduction in risk.
  • Most of the clean energy market, are low margin high scale businesses. This means that they may never be able to offer a large enough return to commercial lenders in order to make them attractive. They are also usually early stage, which makes them harder understand and riskier. Blended finance vehicles combining people like social investors, NGOs, public money, early stage lenders can allow these organisations to still access debt, in a way that works for individual companies.
  • A challenge that CDC have experienced, is when a large public body comes in and distorts the market. For example, if the World Bank lends to businesses in a local area at a very low rate, it is difficult to then transition those organisations onto commercial rates. This means commercial lenders don’t enter the market and businesses can’t scale.

Ecozen Solutions

Ecofrost’s product allow farmers, florists and families to have easy to use, solar powered cold rooms. Controlled by an app that monitors temperature, humidity and power usage, they allow perishable goods to be stored for longer.

In the case of florists, this allows them to store their plants for up to 20 days, rather than 3 — increasing yields, profits and allowing them to grow their business in a sustainable, low carbon way.

Ecozen Can increase a farmer’s profits by as much as 40%

In India, 370 million tonnes of goods are at risk of perishing each year. Ecozen have helped reduce wastage from 27% to 4% in parts of the market. This means that individuals can also wait until the right time to sell their products in the market, rather than being driven by the day that they harvest.

Farmers in India say that their average market is 50km radius from their location. Ecozen have helped individuals to expand their horizons and see the whole country as a potential place to sell their products, thanks to the refrigeration they can offer small scale producers.

Lumos Global

Over the last 15 years, mobile phones have grown to cover almost the whole of Africa, having had no foothold previously. Lumos, are aiming to drive the same revolution in mobile power.

In Lagos for example, most people access electricity through the grid or via generators. Lumos exist to help families move away from these dirty systems, to a cleaner, more efficient and safer source of energy for their home. Their systems light bulbs, power laptops, run hair clippers and most small consumer electric goods.

In order to guarantee their accessibility to their whole market, Lumos have invested in integrating with airtime billing. This allows their customers to buy their product through whichever method they pay for their mobile phone.

Lumos have installed over 88,000 solar home systems

By creating a product that people are enthusiastic about, is easy to adopt and meets their needs, Lumos have been able to rely heavily on word of mouth as their main source of marketing/promotion.

Leaving no-one behind Panel: Financing approaches for reaching the last mile

Ron Margalit, Principal, Blended and Impact Financing, Lumos Global
Prateek Singhai, Co-founder and COO, Ecozen Solutions
Lucie Klarsfeld McGrath, Project Director, Hystra
Surabhi Rajagopal, Principal Analyst, SELCO Foundation

  • SELCO Foundation mirror the model of their parent company to help banks understand the off grid solar industry, and what their role could be. One of the key areas is to help banks feel more confident in the measures that are in place to mitigate the risks of lending to these areas. Some of these measures include guaranteeing loans for the first 100 early adopters or paying back 20% of their revenue from people who drop out of their products.
  • Practical Action and Hystra are working to set up a global logistics solution. The Global Distributors Collective aims to improve these clean energy business’ efficiency and effectiveness by sharing knowledge and leveraging collective buying power.
  • Ecozen have started to change their business model, to allow farmers to have their cold room for free. They then pay for it on an ongoing basis from the extra returns they see. This has taken their adoption rate to about 70% at the last mile, but they are finding it challenging to raise finance against this approach.
  • Their partnership with MTN allows Lumos to have a full distribution network within their shops. This has allowed them to expand rapidly and for a relatively low cost, whilst making the most of their word of mouth success.
  • The SELCO Foundation believe that appliance efficiencies are critical when considering the financing of off grid solar. The transition from inefficient AC motors, to DC tools for example, will help make the whole package much easier to progress.
  • The IEA worry that there will be remote areas of Africa, which will be without electricity even in 2050. Lumos believe that this is a huge opportunity — but one that can only be solved by development money and NGOs underwriting commercial expansion.
  • At the moment, off grid solar companies have to cover a vast array of capabilities from credit scoring to software development. Lumos believe that in the future, this will become disaggregated and organisations will specialise in one or two.

If you want to help Ashden and their winners to deliver the clean energy future that we all need, then please consider supporting the charity: https://www.ashden.org/support-us/supporting-ashden

William Joseph

We're a branding and digital agency. We help you excite new audiences, engage stakeholders, build loyalty and raise funds. www.williamjoseph.co.uk

    James Gadsby Peet

    Written by

    Director of Digital at William Joseph — a creative agency. I’m always up for chatting about fun things and animated cat gifs www.williamjoseph.co.uk

    William Joseph

    We're a branding and digital agency. We help you excite new audiences, engage stakeholders, build loyalty and raise funds. www.williamjoseph.co.uk

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