Why solar makes sense

In rural, off-grid African communities solar PV is almost certainly the best option for providing clean, afordable electricity for lighting, phone charging and appliances like radios and TVs. But while sales are growing the barriers to reaching scale are still formidable. The opportunity and the challenges are well articulated in this recent article by Carl Pope, a former executive of the Sierra Club.   

http://www.devex.com/en/news/the-business-case-for-going-solar/78025?mkt_tok=3RkMMJWWfF9wsRolv6vLZKXonjHpfsX56ekpXaWg38431UFwdcjKPmjr1YIHTsJ0dvycMRAVFZl5nQhdDOWN

I was in Mwanza, Tanzania recently visiting some of the small businesses we are working with. While there I had dinner with Mohammed Parpia who runs Zara Solar, Tanzania’s largest solar distributor. GVEP has established a strong working partnership with Zara, helping extend their distribution into rural areas through a network of micro-dealers and through promotions at local markets.

Credit remains a major constraint – both for the micro dealers and for the customer. We have recently succeeded in enabling the dealers to access loans from a local credit provider but Zara is still pondering what to do about consumer credit.

The answer to the credit problem may lie with innovative business models proposed by companies like eight19 – www.eight19.com – and DT Power who are pioneering pay as you go systems.

Tags: energy access Africa, pay as you go solar, solar PV

Quality Counts but Quantity is Encouraging

I was recently reporting some results for The Partnership for Clean Indoor Air (PCIA) regarding the number of improved stoves that GVEP International supported businesses sold in the period of Jan – Dec 2011. Although I have been working with these businesses and visited many of their production sites I was still amazed to collectively see the number of stoves that they sold.

The program currently works with over 350 improved cookstove businesses throughout Kenya, Uganda and Tanzania within different parts of the value chain – some businesses produce solely stove liners, others assemble and some retail the complete stoves. For reporting purposes we were interested in the number of complete stoves that were sold to the end user. To estimate this we totaled the number of stoves sold by those involved in complete cookstove production and stoves sold by cookstove assemblers. The total for the three countries came to 275,842 stoves. Although some of these stoves may be of questionable quality and of varying lifespans, this is still a pretty impressive figure!! It also did not include the number of ICS liners sold and stoves sold by retailers (to avoid double counting) which also make up a large number. This figure not only demonstrates the production capacity of locally manufactured stoves in East Africa but also that people are buying them.

During the market assessments that we recently conducted on behalf of the Global Alliance for Clean Cookstoves it was noted that many of the stoves within the East African market are of poor quality. Local producers such as those under The Developing Energy Enterprise Project are an ideal channel for raising the quality of the stoves on the market – an objective that the program seeks to achieve. If this can be combined with greater emphasis on marketing activities and raising consumer awareness to increase the demand for quality, then the number of stoves being sold will not only increase but will also be of higher quality, hence having even larger environmental, income saving, social and health impacts for the region.

Training of Energy Operators in West Africa

A coalition of energy operators including EDF, 2iE, FDE, and AMADER (Malian Agency for the Development of Domestic Energy and Rural Electrification) presented the launch of the first two test trainings to energy operators in Ouagadougou last week.
The trainings are part of the EU Energy Facility programme to which GVEP is adhering by sponsoring the participation of the Malian Agency in the Malian part of the plan to train 40 trainers (20 for both Burkina and Mali) and to provide 400 hours of training for 83 rural electrification operators in both countries before September 2014.
The energy operators in both Mali and Burkina Faso are currently facing several difficulties, one of those difficulties being the lack of training for their employees or volunteers. They need capacity building both in the technical domain and in terms of managerial and administrative aspects of the management of a rural electrification site. In Mali, AMADER is best placed to organize these trainings as it is in close contact with the operators and knows their businesses inside out.

The test trainings were aimed at building the capacities of the operators of rural electrification cooperatives (Coopel) in Burkina Faso. During the first training, organized by SONABEL, 11 technical responsibles of Coopels were trained on the use and maintenance of diesel generators, while during the second training, organized by 2iE, the capacity of 25 Coopel administrators and managers was built on the administration and management of an electricity cooperative.

AMADER, thanks to the financial contribution of 50 000 euro for their participation in the project by GVEP, will organize test trainings in Mali in the next couple of months. These test trainings consist of 5 different types of trainings.
- A first type is aimed at the technicians working at diesel generator sites, whose capacity will be built on the usage and maintenance of diesel generators and its network.
- In the second type of training, the technical managers will be taught to master (i) the workings of a diesel generator, (ii) the scheduling of maintenance actions, (iii) the development of exploitation reports.
- The third type of training focusses on the capacity building of accountants so that they can master technical and practical accountancy issues in the rural electrification sector.
- The fourth type focusses on the training of commercial agents and deals with commercial management of a rural electrification operator’s site. The topics that will be dealt with are not only commercial procedures, billing, and subscription agreements, but also include the procedures for recovery of money in case of non-payments, as this is an issue operators frequently deal with.
- The final type of training focuses on the technical and management aspects of hybrid (diesel-solar) installations. As diesel prices are currently very high, several rural electrification operators in Mali are struggling to make ends meet. This is why several of them are switching from systems based solely on the use of diesel, to hybrid systems with solar energy. Unfortunately, most operators have limited experience with the technical and management side of this. The fifth type of training thus aims to fill this gap.

Thanks to these trainings, operators will be able to better manage their sites both on a technical and administrative level. This will allow them to improve their businesses and improve their services offered to the rural communities in which they operate.

Put the customer at the heart of your strategy

During March this year a ‘human centered design’ consultancycalled IDEO visited Tanzania to look at cooking stoves. GVEP staff helped faciliate their visit to Mwanza. They later moved on to Dar es Salaam and Zanzibar. The IDEO team spent time cooking, shopping and talking with the people who buy stoves – trying to understand how they cook, why and what their aspirations are. The team identified five broad issues emerging from their research.

• A woman may buy an improved stove but that doesn’t mean she’ll use it all the time – strategies to promote efficient stoves need to go beyond the purchase decision and encourage increased use of the best options available.
• Fuel availability and affordability determines what stove a woman will use. If charcoal isn’t available an improved charcoal stove isn’t much use. Fuel supply is critical.
• Stoves are seen as utilitarian – cheap functional items. They aren’t sexy. If we want to sell more effcient and cleaner stoves we need to redefine the product category. A clean stove needs to be seen as something quite different from other stoves – more in the category of electrical goods – an aspirational product.
• Fuel savings experienced on a daily basis may not be enough to make much impact. What women really care about is ease of use. A stove has to be faster, prevent the pans from getting black and be easy to handle. Too many ‘improved stoves’ are difficult to light and slow to cook.
• Reduced smoke and reduced risk of burns are tangible benefits people can relate to. Decreased longterm risks of chronic illness are not. We need to focus on comfort.

There is a lot of good sense in this. Too often in cookstove ‘programmes’ the consumer is seen as the ‘problem’ – as ignorant of the benefits of stoves, needing to be ‘educated.’ But maybe they aren’t so dumb afterall. Perhaps its the product that is the problem. 

You can read the final out put from their three week trip here:https://s3.amazonaws.com/ideo-org-images-production/downloads/17/original/20120323_Final_Small.pdf

Tags: clean fuels, customer focus, improved cookstoves, indoor air pollution

Cooking with biomass is bad for your health

Last Friday I went to a talk by Prof. Kirk Smith, one of the world’s leading experts on the health risks from household air pollution.  Kirk is based at the University of California, Berkley and has spent 30 years working on issues relating to the inhallation of harmful gasses and particulates from open fires and inefficient cooking appliances. Last year he and his team published results from the first true randomised trials on impact of ‘improved stoves’ on the health of the users.

The health impacts of unsafe cooking are huge. Kirk and his colleagues found that even with  chimneys pollutants linger in the outside air where they continue to pose a threat to health. The only safe way to cook with wood or charcoal is where combustion of the fuel is close to 100%. This is hard to achieve and the stoves which can meet these standards are expensive. The type and condition of the fuel and how the stove is used also impact on efficiency.

‘Improved stoves’ may save on fuel but most stoves have limited impacts on reducing risks to health because exposure to particualtes and carbon monoxide is still at dangerous levels. The goal has to be to move away from using biomass. In the richer parts of the world people have moved to gas and electricity. People in the less well of parts of the globe also want to migrate to clean and easy to use cooking appliances and fuels.The problem is how to achieve this.

Alternatives to biomass are usually not available to poorer households in less developed countries. Where they are available they are expensive. Being aware of the scale of the health risk is a good starting point. But it doesn’t mean we know how to solve the problem. As Kirk pointed out last Friday John Snow proved the connection between poor sanitation and cholera in London in 1854. Today a third of the world’s population still doesn’t have safe drinking water.

There are things we can be doing. Expanding use of LPG, even it this largely benefits, middle class households, will help. Using solar water heaters rather than wood fires to heat water and encouraging use of more efficient cooking utensils to reduce the time spent cooking might also be beneficial.

Of course efficient stoves also help on some health dimensions – but they are only a step towards a solution. Kirk suggested giving highly efficient stoves to pregnant women as part of state funded ante-natal programmes might be a way forward. There are major societal benefits to be gained from reducing air pollution. Relying purely on commercial stove sales to deliver these isn’t a credible strategy.

The talk was organsied by the household energy network HEDON whose website is a great resource for anything to do with stoves. www.hedon.info

Tags: acute respiratory disease, household air pollution, unsafe cooking practices

Developing a market for improved biomass stoves

We are currently completing assessments of the stoves market in Kenya, Uganda and Tanzania for the Global Alliance on Clean Cookstoves. It has been an interesting exercise highlighting a range of challenges and opportunities.

Improved cokstoves have been promoted in Kenya since the 1980s and are now very widely used in urban and peri-urban households. Penetration rates are as high as 80% in some cities – though quality of most stoves is poor. There even seems to be a market in rural areas for wood stoves which are built into a kitchen for a few dollars by a local artisan. Testing of the best of these stoves – urban and rural – shows overall good results on fuel efficiency and reduction of exposure to smoke. Exposure to carbon monoxide seems to be increased however so it is not all good news. A small number of highly efficient and low emmision stoves are now entering the market – but they are expensive even with carbon credits subsidising the price.

In Uganda and Tanzania the market is much smaller with far fewer urban and periurban households buying efficient, clay lined stoves, and no real market in rural areas. Generally quality is poor. The carbon monoxide issue exists here for local stoves too.

On the plus side one household gas company in Kenya is experimenting with very small canisters which can be partially refilled – allowing customers to buy small amounts of gas. There is strong demand for a clean fuel like LPG and scope to expand the market in all three countries. This will mainly benefit middleclass urban households though.

Production and sale of improved stoves involves a wide number of actors. This is a highly fragmented industry with many small artisans and traders involved. Ugastoves in Uganda is almost alone in producing at scale (50,000 stoves a year) in a factory setting. Quality stoves cost more to make and are therefore harder to sell. Many producers cut corners and hence quality to hold prices down.

So what can be done to raise quality across the region and expand the markets in Uganda and Tanzania? Here are a few ideas.

Encouraging the emergence of more producers like Ugastoves is going to be critical. Businesses at this scale are able to benefit from carbon finance which helps subsidise the price of stoves making them attractive to customers. Producers of quality, finished stoves who have the capacity to grow should be supported with advice, marketing support and finance. Support on redesigning stoves to reduce CO emmissions is also needed. Getting more quality stoves into the market is critical.

In Kenya there is potential to develop a rural market for low cost stoves. This may be less easy in Uganda and Tanzania currently. Focusing on urban and peri-urban markets might be best if a commercial approach is the route being pursued. Rural areas will start to engage once quality stoves becoem common in cities and towns.

There are plenty of carbon developers in the region looking for producers and distributors to engage with.

Tags: biomass, global alliance for clean cookstoves, improved cookstoves, indor air pollution

Are grants still the only way to kick-start BoP energy enterprises?

Over recent years a number of development programmes in East Africa have together incubated hundreds of micro-scale businesses at the Bottom of the Pyramid (BoP). But what avenues of growth should we expect from the small-scale energy enterprises seeking to make a bigger impact?

I read last week about a start-up social enterprise providing low-cost lighting services through solar micro-grids in India. The enterprise, Mera Gao Power, expects to install 50 systems this year but has ambitious plans to increase this figure to 1000-2000 over 5 years. Given the capital intensity of solar installations, I began looking at how such an expansion would be financed. A seed grant from USAID’s Development Innovation Ventures has helped to install the first phase of solar micro-grids and a comment from the company’s founder makes clear that it could not have been done without the grant. But he goes on to stresses that social enterprises can indeed be sustainable and scalable – once commercial funding is available. But before then, while many commercial investors are still too risk adverse to invest, are grants the only way to fuel growth?

Reflecting on the briquette sector in East Africa, for which there is increased attention to expand, organic growth seems unlikely; there becomes a point where proper (and capital intensive) machinery is needed. Looking at the few successful commercial businesses that produce briquettes in the region at any significant scale, almost all have benefited from grant funding by government and non-government organisations in order to purchase this machinery.

Impact investing is certainly on the rise and attention towards investment opportunities in BoP markets continues to increase. Evidence from businesses that have been linked to finance through GVEP’s Developing Energy Enterprises Programme and ventures like Mera Gao Power in India suggest that up-front capital investment can indeed lead to a financially sustainable energy enterprise and create market opportunities in previously under-served areas.

The challenge that remains is to expedite access to this finance and to direct it to where it will lead to profitable businesses that have most social impact.

Tags: Bottom of Pyramid, briquettes, grants, impact investment, MSME growth, seed funding