Archive for the ‘Energy’ Category
Clean Sweep: Supporting Entrepreneurs in the Energy Sector
In this day and age, most of the world is worried about climate change. That is why instead of delivering energy through top-down initiatives like large-scale utilities, E+Co looks for small enterprises that can take hold locally. Rather than bringing in Western business experts, it hires regional field staff who recruit and support entrepreneurs in their own communities. Moreover, its efforts are inspiring others to see the connections between energy, poverty, and climate change. Alvaro Illanas Cerezo summarizes Susie Boss’s article “Clean Sweep” from Stanford Social Innovation Review, below.
Energizing entrepreneurs
E+Co’s portfolio proves that there’s no shortage of clean energy ideas or entrepreneurs in emerging markets.
A report stated that willing entrepreneurs represent an abundant but largely untapped resource. It also noted, however, that technical assistance for small business is simply not available in many developing markets.
E+Co unleashes this entrepreneurial potential with a three-part model that combines technical assistance with capital.
- Part 1: It helps entrepreneurs develop solid business plans. Field staff use a toolkit and their understanding of local issues to help would-be entrepreneurs analyze their market and select clean energy products. The business development process is thorough but not over-sophisticated. Similarly, the organization prefers proven solutions to cutting edge technologies.
- Part 2: It lends seed capital, typically $25,000 to $500,000 at average annual interest rates ranging from 8 to 12 percent. Getting to yes requires approval from an independent, unpaid investment committee made up of finance professionals. The experts bring a deep understanding of niche energy markets and small- to medium-sized enterprises.
- Part 3: It provides access to growth capital.
Measuring everything
E+Co relies on concrete metrics to convince diverse investors to fund the organization. A triple bottom line scorecard rolls up data from 30 indicators across three categories: financial, social, and environmental. E+Co admits that it can be swayed by stories of lives improved, but he’s also hard-nosed about numbers, and so looks to the scorecard to see that the portfolio’s average annual return is 8 percent.
Grant funding has become a smaller piece of the pie now that loan repayments generate revenue to reinvest.
E+Co is similarly analytical when it comes to evaluating risk. Although the organization steers clear of untested energy ideas, it sometimes approves demonstration projects that bring proven products to new markets.
Growing the space between
E+Co must now make sure the funds keep flowing. Its loans fall into what its CEO calls the space in between: bigger than microfinance but smaller than corporate-size deals. This “missing middle” is unfamiliar territory for many public and private investors. The main goal is to start a movement, so that small and growing enterprises have ready access to capital. Global acceptance of microfinance has taught E+Co the value of aggregating players to speak with one voice.
Have you had any experience in supporting small businesses in the energy sector? Share your experience with us in the comments section.
Energy Generation for Low-income Customers
Low-income markets are often the most neglected when it comes to access to energy. Traditional energy sources have been firewood, and kerosene stoves. There are recognized health risks that come with these. Not to mention that they are not efficient. A new breed for energy solutions are making their way into these low-income markets. Next Billion, a great resource for information on all things within the development sphere, has put compiled a profile of some organizations that are catering to BoP markets through their innovative products.
Enabling Access to Energy at the BoP
The focus on renewable sources of energy has been reinforced in recent weeks by the BP oil spill off the Gulf Coast in the U.S. While one part of the globe voraciously consumes energy, 1.6 billion people globally have no access to electricity. A further 3 million still use traditional biomass for cooking, the health hazards of which have been substantially documented.
However, there are several – mainly local entrepreneurs – that are offering valuable energy solutions to this very segment of people. Most of these enterprises are removed from the traditional energy enterprises, and offer solutions based on local needs, and local possibilities. The Ashoka Network, in collaboration with Hystra, a hybrid organization that works with business and social sector entrepreneurs to design and implement strategies for the BoP, conducted a study on the work of these enterprises.
The study, “Access to Energy for the Base of the Pyramid,” is an in-depth look at several market-based approaches to BoP energy requirements. It looks at the different kind of technology available such as:
- Grid connections: which turns the BoP into legal, paying consumers
- Devices: such as solar lanterns and biomass cook stoves
- Solar home systems: Which deliver electricity to households
It also looks at systemic support to deliver these solutions. These include the roles of co-operatives which take on that challenge of providing sustainable power supply and create income generating opportunities, and the role of finance and various financing intermediaries. It also makes recommendations for action, outlined for various system enablers – aid agencies, governments, social investors and so on.
The study puts out two interesting observations – that it is not only important to focus on providing solutions that are cost and need-efficient, but also to optimize “human capital.” And secondly, that the most successful social entrepreneurs are also the ones who have tried harder to get the users who were implied in the value-addition process involved.
Download the entire report via the Hystra website.
Rural Energy: Power Play for the People
The idea of supplying free electricity to farmers has created political ripples across the country based on the belief that supplying electricity for free would be an onerous option for the Government as electricity production is expensive. Chandrakant Pathak a mechanical engineer from Gujarat remarks that free electricity for farmers is not all that impossible and it is quite an easily achievable goal and points that anything that moves can be used to generate power. He has invented an array of interesting improvised power generating gadgets to suit the needs of rural people.
This article documents all those interesting innovative power generating and modified power-consuming gadgets of everyday use, like motor pumps, flour mills and even electric vegetable shredders that could run on manual or bullock power. He believes that if accent was placed on local power production by the people, not only would the cost per unit of power come down dramatically, but the entire power problem would become non-existent in a few years.
Read the full article here.
Energy planning and the developing world
To “go green” today is much less a fashion statement as it may have been even five years ago. Today its not just cool, or hip to go (environmentally) green, one is often expected to do so. I was recently chastised for buying a set of incandescent light bulbs, and was only let off the hook, when I pointed out that my need was rather urgent, and the store didn’t stock the long-lasting enviro-friendly ones. My guilt hit away at me the entire evening, and to be honest, I haven’t been able to install those incandescents.
The search for alternative energy needs continues as the perils of global warming get more real year on year. The development of new energy systems however are determined by choices. These choices are becoming more and more pronounced and articulated.
As technology develops to meet these choices, business need to plan for a future of changing scenarios. Shell, a leading energy company actively plans fo varying scenarios to help them manage their future better. According to the company, scenario planning helps focus on “critical uncertainities. On things we don’t know about which might transform our business. And on the things we know about in which there might be unexpected discontinuities.”
As part of their scenario planning, in 2001 Shell looked at the possible energy scenarios in 2050. They identify two possible scenarios – Dynamics as Usual or The Spirit of the Coming Age.
Dynamics as Usual contends that various competing priorities will limite the adoption of radical technology change. For example, countries like India and China will seek greater economic growth, while developed OECD countries will seek to improve energy efficiency furthering the life of the internal combusion engine. This scenario will aslo see fluctuating government support for renewable energies.
The Spirit of the Coming Age will see ’superior ways of meeting energy needs’ being developed. This, Shell contends, will be a world of experimentation and many failures. Fuel cells appear to be the order of the day in this scenario. Not surprisingly Shell suggests that technology innovation will often arise from niche market fringes, where physical constraints force innovation and consumers are willing to pay a premium. Incumbent suppliers, they suggest, often ignore these markets.
The forecast in both scenarios have interesting implications for energy solutions in the developing world, and by extension the BoP. Personally, I belong to the group that believes that the developing world needs to take more cognizance of environmental challenges, and must rise up to those challenges by seeking out alternative, efficient solutions that do not compromise economic progress. Easier said than done. But here’s where technology support can play a huge role. If we can successfully engage the IITs, IIScs and the innumerable other technology labs in India to provide solutions to our energy needs, we could provide the right kind of solutions for the coming age. Innovation, after all is often borne out of necessity.
Your thoughts?
Read the entire Shell Scenario Report here.
Sustainable Energy Solutions for Rural India
Rural electrification still remains an area for much-needed development in India. While today many urban areas are focusing on sustainable living, several rural areas in India have for long used sustainable energy, such as bio fuel. In their article, “Sustainable biomass power for rural India,” authors N.H. Ravindranath, H.I. Somashekar, S. Dasappa and C. N. Jayasheela Reddy discuss the case of biomass gasifiers to meet rural electrification needs. The abstract to their paper is presented below.
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The performance and impact of a decentralized biomass gasifier-based power generation system in an unelectrified village are presented. In Hosahalli village, Karnataka, India, lighting, drinking water, irrigation water and flour-milling services are provided using power derived from the biomass gasifier-based power generation system. The system consists of a 20 kW gasifier-engine generator system with all the accessories for fuel processing and electricity distribution. The biomass power system has functioned for over 14 years (1988–2004) in Hosahalli village (population of 218 during 2003), meeting all the electricity needs of the village. Lighting and piped drinking water supply using biomass electricity was provided for over 85% of the days during the past six years. The fuel, operation and maintenance cost ranged from Rs 5.85/kWh at a load of 5 kW to Rs 3.34/kWh at a load of 20 kW. Technical, social, economic and management-related lessons learnt are presented here.
Read the entire paper here.
Rural Energy in Developing Countries
The following is an abstract of the work by Jose Goldemberg titled Rural Energy in Developing Countries, taken from Chapter 10 of the book World Energy Assessment: Energy and the And the Challenge of Sustainability, by Amulya N.K. Reddy, Kirk R. Smith and Robert H. Williams.
Supplying modern energy services to the 2 billion people who still cook with traditional solid fuels and lack access to electricity is probably one of the most pressing problems facing humanity today. The amount of energy needed to satisfy the basic needs of rural populations around the world is relatively small, and appropriate technologies are available. However, widening access to modern energy services is limited by the extreme poverty found particularly in the least developed countries. Living standards in rural areas can be significantly improved by promoting a shift from direct combustion of biomass fuels (dung, crop residues, and fuelwood) or coal in inefficient and polluting stoves to clean, efficient liquid or gaseous fuels and electricity. Although consumers tend to shift to these modern, higher-quality energy carriers as their incomes rise and the carriers become more affordable, the process is slow. Yet a shift to such carriers can reduce the damage to human health and the drudgery associated with continued reliance on inefficient, polluting solid fuels.
This chapter describes experience with and prospects for improving the technologies used to cook with biomass in several countries, as well as the development of clean, non-toxic cooking fuels. Progress in rural electrification—using both centralised, grid-based approaches and small-scale, decentralized technologies—is also described. Technological developments alone, however, will not improve access or promote greater equity. New institutional measures are also needed, including financing to cover the initial capital costs of devices and equipment. Energy initiatives will be most successful when integrated with other policies that promote development. And because local populations will ultimately use, maintain, and pay for energy services, they should be involved in making decisions about energy systems.
Read the entire chapter here.
Sustainable biomass power for rural India: Case study of biomass gasifier for village electrification
The performance and impact of a decentralized biomass gasifier-based power generation system in an unelectrified village are presented. In Hosahalli village, Karnataka, India, lighting, drinking water, irrigation water and flour-milling services are provided using power derived from the biomass gasifier-based power generation system. The system consists of a 20 kW gasifier-engine generator system with all the accessories for fuel processing and electricity distribution. The biomass power system has functioned for over 14 years (1988–2004) in Hosahalli village (population of 218 during 2003), meeting all the electricity needs of the village. Lighting and piped drinking water supply using biomass electricity was provided for over 85% of the days during the past six years. The fuel, operation and maintenance cost ranged from Rs 5.85/kWh at a load of 5 kW to Rs 3.34/kWh at a load of 20 kW. Technical, social, economic and management-related lessons learnt are presented here.
Read the case study here.