Ideas on Energy Wants Your Ideas for an Energy Access Challenge!

Competitions and prizes have become an increasing popular way to spur innovation in finding solutions to the world’s most complicated challenges.  Many of the companies doing great work to address energy poverty have benefitted substantially from winning these types of events.  Solar Sister was able to take their enterprise to the next level as a result of investments made when they were identified as a leading contender in the Women, Tools, Technology ChallengeNuru Light earned startup capital when it won the 2010 Tulane Business Plan CompetitionE + Co recently received US$350,000 from the Zayed Future Energy Prize.  These organizations are touching the lives of the tens of thousands and in some cases hundreds of thousands of people.  However, energy poverty is a problem whose scale is measured in billions of people.  If we are to make a significant dent in addressing this issue we need solutions that can rapidly scale.

One of the ideas I have been kicking around is an off-grid energy challenge for significantly scalable solutions in developing countries/frontier economies.  Energy poverty is a multifaceted problem where issues ranging from technology, access to credit and capital, consumer awareness of solutions, regulatory obstacles, and poverty all interact in ways that prevent people from meeting their energy needs.  I am looking for ideas from readers of this blog on how to best frame a competition and what element(s) of this challenge to try and address through the contest.

One possibility is to have a technology oriented competition.  Many companies don’t believe that people living in slums or more remote areas have enough money to be worth design solutions for, leading to underinvestment in relevant technologies for them.  Current tech competitions tend to focus on high end engineering regardless of price such as the Automotive X Prize which sought cars that could get 100 mpg, an important goal but not focused on the needs of those in poorer countries.  Would a technology oriented competition that sought prototypes for village or household level energy solutions that produce the most electricity at the lowest cost be the contest that would have the biggest impact?  Perhaps you think the biggest problem isn’t the lack of technical solutions but the lack of consumer education about existing technologies and good business models for distributing those items.  If that’s the case then a business plan competition focused on energy for places unlikely to be connected to a central grid anytime soon might be the best use of resources.  Or maybe you think the issue is something else entirely.

Please send me your ideas for the competition.  Use the comments section for this post so we can turn it into a discussion.  Which parts of the challenge of energy poverty should this competition focus on?  What criteria should be used to evaluate entries?  What should the prizes be?  I am hoping to shop this concept around to my contacts at foundations and private sector companies as well as multilateral and bilateral aid agencies once it is more developed.  I look forward to using this community’s energy to generate great ideas!

Solving Energy Poverty: What it Takes to Make it onto Investor Radar

A man loads solar panels on to a donkey. This is the "last mile" for energy distribution in many parts of the world and part of the solution for energy poverty.

Ideas on Energy is thrilled to have E+Co Co-Founder and CEO Christine Eibs Singer as a guest blogger this week. She recently traveled to Abu Dhabi to attend the World Future Energy Summit and accept an award on behalf of her organization for the great work they have done to address the global challenges of energy poverty and climate change. Christine noted on E+Co’s blog that there were not many other organizations at the event “focused on small scale clean energy solutions for the developing world.”  In the entry below she reflects on why that was and how to address the challenge of energy poverty globally.

When one thinks about investing US$100 billion dollars in clean energy, visions of large wind turbines and hectares of solar panels dance through the mind.  It is rare to find an investor whose dreams meander outside this box, to the rural communities and households that comprise the gaps in the grid, to the enterprises that can provide an answer to global energy poverty through the production and distribution of small scale solar systems, mini-hydro plants, household biogas units and fuel efficient cook stoves.  It’s even rarer to find those who have actually pursued those investments.

This was the challenge I faced as a participant in the World Future Energy Summit in Abu Dhabi last month.  The exhibit space was packed with large scale technologies.  Deals were in the making, almost all of which were $500 million and up.  So, when the UN Secretary General opened this summit with an address that set forth a vision of universal access to modern energy services, at a price tag of US$35 billion per year, I recognized the sharp disconnect to the equipment on display and the transactions being negotiated.  This disconnect was further emphasized when  Ditlev Engelhead of Vestas accepted the Zayed Future Energy Prize on behalf of their 22,000 staff, and I accepted on behalf of E+Co’s 48 staff.

Of course, the equipment on display and those deals being made are critical to meeting climate and energy challenges.  But there’s more that has to happen.  There are more than two billion people who live in energy poverty who have yet to benefit from the commercial and grid installations that filled the floors of the forum.

Energy poverty is a disease.  Like malaria, polio and dengue it innately affects a person’s ability to live fully.  But like these diseases, it can be treated.  The equivalent of cures and vaccines exist, and the path to providing diagnosis, prescription and treatment has been paved over the last decade by battalion of companies, including small “powerhouses” such as E+Co, SELCO-India, Tecnosol, SELF, Toyola, AIDG, Winrock International, Barefoot Power, PowerSource Micro-Grid and D-Light.

The challenge to administering these treatments is the very scale of the disease: more than 400,000,000 households are infected; one-fifth of the world’s population endures the symptoms of energy poverty.  As is often the case with widespread diseases, the cures for energy poverty are known.  It is their dissemination and distribution, combined with the scale of the disease that makes the situation seem intractable.

E+Co’s 16 years of experience has shown that curing energy poverty requires that each infected household have access to just a few things: basic electricity for light and low-power appliances such as a cell phone; modern fuel and a stove for cooking; and small amounts of motor power for water pumping, sewing, grinding, husking, or other income improvements.  Amazingly, the “cure” costs as little as $250 per household.

But to capture the interest of many of the investors I met in Abu Dhabi, one would need to package the cure for at least 2 million households in one fell swoop.  But for E+Co and a few others, this bundling has not been attacked and few are willing to take on the high transaction costs that result from packaging tens of thousands of households, despite the financial, social, and environmental impacts that result.  That is why I walked the exhibit aisles at WFES alone.

When E+Co began its work in the underdeveloped clean energy enterprise finance sector in 1994, no one else was focused on enterprises as a vehicle of delivering clean energy to combat poverty and climate change.  While still relatively unique in our singular focus, we are now joined by others who see the market and impact opportunities for small and growing clean energy businesses in the developing world. They enter from the technology window; or focus on the productive uses and income that will result.  Some are driven to create more equitable payment schemes for the energy poor or to reduce the health and deforestation impacts.  Still others are here because they know the social equity possibilities that can result from energy access.   But when the bottom line is drawn, all are here because they know the market and business possibilities exist.  We know this because households at the base of the pyramid now spend $38 billion a year on dirty, fuel based lighting[1].

Our challenge is to bundle the energy access needs – to “scale” to 2 million households in a single transaction, while unbundling the capacity building and large scale finance to replicable efficient interventions.  Those that have the experience to make this happen are out there, but like the cures to energy poverty, we too are decentralized.

Our most recent “back of the envelope” estimate is that we need 80,000 enterprises to meet the energy needs of 400 million households (or 2 billion people).  I often tell the good news/bad news story about E+Co’s investment history:  The good news is that we have invested in 268 clean energy businesses.  The bad news is that’s more than anyone else in the world.

The movement suffers from lack of access to capital, just like the enterprises it will serve.  While challenging and filled with risks, with the blending of public and private capital, we CAN pursue that first launch of enterprise development in order to reach the 80,000 enterprise mark over the next 20 years.  E+Co and others know the risks, the opportunity, and core components of the solutions.  There’s no need to re-invent the wheel.  The growth of this movement will stimulate investment in the organizations and systems that can deliver the energy cure: the learning platforms, the catalytic seed capital, the market development.  Just as health professionals and volunteers, community organizations and governments all reach out with public health programs, vaccinations and treatments, the same coordinated approach to distributing energy improvements can be pursued.

The successful outcome is a well financed and effectively implemented local energy enterprise, built on strong business fundamentals.  But, rather than visions of large scale wind turbines and transmission and distribution lines, we also have to see visions of local entrepreneurs and their distribution channels.  Part of the cure for the disease of energy poverty may look something like the picture above, the transport necessary for the “last mile” distribution.

[1] Figure excludes firewood, charcoal, etc.

Mills, Evan. 2005. “The Specter of Fuel-Based Lighting.” LBNL-57550. Science, 308(5726):1263-1264

The U.S. Military is a Bunch of Green Loving Tree Hugging Hippies

Ok that might be a bit of an exaggeration, but Tom Friedman makes a strong case in today’s New York Times that the U.S. Military is leading the way in developing and deploying green technologies. Small economy cars start looking more attractive than an SUV to the average American consumer when gas goes above $4.00 a barrel but the military is even more heavily incentivized to think about cutting its fuel consumption since in Afghanistan it pays about $400 per gallon, has one person killed or wounded per 24 fuel convoys it runs, and spends about $100,000 per person per year in fuel costs. A $10 increase in the price of a barrel of oil raises fuel costs for the Air Force by about $600 million. Friedman discusses a number of efforts to replace conventional fuels with biofuels for trucks, planes, and ships.

The view from inside the Pentagon isn’t quite as simple as Friedman makes it out to be. In an email from a Pentagon official published by The Danger Room blog, the official notes that even if the army powered all of its Humvees with maple syrup rather than gas they would still need a supply chain to get the maple syrup from where it is produced out into the field. Additionally, there are lots of suppliers of oil out there. It may go up or down in price but it is always available from multiple sources unlike biofuels made from algae or mustard seeds. Although it is a worthwhile social goal to have the military move to less environmentally harmful alternative fuels, from a narrow security point of view the most important thing may be improving the efficiency of military fuel and power consumption overall.

That being said, it won’t be surprising if the military leads the way to the future for the civilian world in coming up with new ways to power our planes, trains, and automobiles. Although in an age where the Pentagon is seen as being a technological laggard compared to the rapid pace of change in personal computing and consumer electronics, it is important to remember that the military was the first to develop and deploy the technologies that gave us radios, satellites, and the internet. Hopefully the mad scientists at the Defense Advanced Research Project Agency can put the finishing touches on a peanut shell fueled hover craft in time for the next conflict.