Wednesday
June 23
2010

Adeena Schlussel

Energy Generation: Supplying Low-Income Customers in BoP Markets

An energy customer at the BoP may be curious about the source of their energy, but the usable application of the energy is of much greater interest. There are a number of enterprises delivering energy to the BoP, each employing whichever form of alternative energy is most conducive and reliable in its region, but all working towards a shared bottom line. In part two of our energy series, I will cover a few organizations bringing power to the poor; see part one for an introduction.

Whether using solar, wind or hydroelectric energy, there are many dedicated organizations that labor to fuel homes, schools, and larger businesses; without this generation, many would be left in the dark or power-less. We often readabout spiffy individual and specialized electrical devices created to cook a dish or illuminate a book, but the following is a compilation of electricity systems that enable productivity on a larger scale; these organizations work to extinguish the whole slew of problems that are inevitable when a home, school or business is left without a continuous bank of energy. Here are just a few highlights of organizations that are brightening the BoP’s landscape on the communal level.

M38

Although the title M38 conjures images of a hypothetical NYC bus route, this entity is one that provides- as opposed to consumes- fuel. Clara Mankata’s plan started off with the basic sentiment inherent in most energy initiatives of its caliber: let’s extend the grid. Mankata did not have ambitions to work on self-regenerating energy. Rather, she chose a route that would require constant tending, much like that of a paperboy and his route – although, instead of delivering the news, she planned to deliver a more basic necessity.

Originally, Mankata and her son orchestrated a door to door delivery service of Liquid Petroleum Gas (LPG) in Accra, Ghana (that are estimated to cost about 50 cents a canister). For a population dependant on charcoal for the most basic of processes such as boiling bacteria out of their water, a continual source of energy was critical indeed, but charcoal is abhorred by those able to access alternatives. The mother-son pair started by collecting, transporting, filling and returning LPG canisters from their neighbors to remote stations, thus increasing access to improved energy sources in their community.

Beyond being cleaner, safer and more transportable than firewood and charcoal- the prevalent sources of energy for Accra – M38 affords a reliable source of energy requiring little effort on the part of its consumers.

E+Co endorsed the plan with an investment that allowed Mankato to build an LPG station in her village, and thus enable her community members to live in electrified homes with less heavy lifting on Mankato’s part. 1,700 of Mankato’s neighbors benefit from her efforts and many pits once filled with charcoal have since been filled.

Sodigaz

Sodigaz is another E+Co investee that owes its success to the demand for LPG. Similar to M38 in its efforts eliminate “dangerous and dirty” (aka firewood and charcoal), coupled with its ambition to capitalize on the demand for LPG, Sodigaz provides electricity to 21,000 households in rural Mali and now to homes in Haiti as well.

Oudiary Diawara, the company’s founder, theoretically extends the grid, not with familiar power cables and linked towers, but with local supply stations that promise to reliably deliver LPG to its thirsty clientele. A grant from AREED and an investment from E+Co back in 2003 allowed Sodigaz to construct LPG stations in additional locations, thus making the supply much more profitable and accessible. Sodigaz’s reputation is a first-in-the-country mobile filling station where transportability and efficiency is the name of the game.

Zara Solar

Zara Solar is another soldier in the battle for electrification, only in a different location with different tactics. While the aforementioned companies employ LPG as a source of fuel, this group utilizes the power of the sun to supply the people of northern Tanzania (an area where previously only approximately 10% of the population had access to power, one of the lowest electrification rates in the world). The company’s photovoltaic solar panels store the sun’s energy in a rechargeable battery, equipping a home with energy even in non-daylight hours, and thus rectifying solar energy’s curse of intermittency. The advent of solar panels (which traditionally cost about $10 per watt) extends the grid without actually plugging homes into dispersed power stations.

With the Zara Solar system, each home boasts its own solar panels, making them free standing, self-regenerating, independent power systems. (Zara Solar recommends buying a more sophisticated charge controller to prevent over-charging or depletion of this battery, but this item tacks on another 17% of the base cost, so most customers opt out.) Like the previously mentioned organizations, Zara Solar plays the role of middleman, bringing energy to its customers’ homes, and allowing them freedom to allocate the energy to whatever applications that homeowners see fit. Furthermore, Zara Solar helps its customers achieve credit in order to purchase their solar panels, which in turn fosters more care and interest on the part of the stake-holding owner.

SELCO India

Harish Hande relocated to rural India for two years to internalize what it means to live sans electricity. Based on his experiences over the course of those two years, Hande created SELCO India to finance and service solar systems. These systems bring homes and business lighting, cooking, communicating and water heating capabilities. Fifteen years later, his business has grown to 140 employees and 21 energy service centers, but of greater consequence is the 850,000 households served.

The great thing about SELCO systems is once again the decentralization of energy, and subsequently, greater accessibility. A key element in the SELCO model is transferability. When one interested customer conveyed that his ability to purchase two lights would be insufficient in illuminating his four room home, SELCO offered transferable light fixtures that would be able to hop from room to room along with the dweller.

Beyond providing the technology to light up a home, SELCO assists customers in financing these systems. By connecting regional banks to otherwise underprivileged consumers, SELCO accesses funds necessary to complete their transactions while fashioning a pretty reputation for banks across the country. SELCO is truly a pioneer in encouraging banks to create a line of credit, and also diversify their portfolios, by introducing solar lighting technology to their list of investments. SELCO has incorporated credit into low-income customers’ personal finances, helping to end the weekly kerosene expenditure made by many a household.

This sort of pioneering work cannot be quantified like previous organizational successes can, but fostering awareness around granting credit and the need for electricity has indeterminable social benefit. SELCO enacts programs such as one that educates the community about the dangers of kerosene, as well as another that aims to implant street lights along Tibetan roads. As of now, SELCO owns the largest water heating system in India, granting the company some credit of its own.

HUSK Power Systems

HUSK Power Systems gets its name from the same place it gets its energy: rice husks. By converting rice husks into methane, this for-profit business dispenses energy from its 35 mini power plants (of 100kw each) to the people of Bihar. (For a comprehensive summary of this company, read Next Billion’s interview with the organization’s founder here.) One of my favorite facts about their model is that this organization receives funding from Shell, an irony too looming to ignore. Again, a decentralized and affordable source of energy bridges what was formerly an impenetrable gap for the poor, this time thanks to the power of rice husks. The benefits of Husk’s plan are multifold: they recycle a plentiful agricultural waste into a form of energy that is less limited in use than fire; the process produces ash that can be used as fertilizer or cement; they work in tandem with the Indian Government to develop a clean development mechanism certification (defined in the Kyoto Protocol) to allow for carbon credit sales and most importantly, homes and businesses can finally snag a piece of the energy pie while Husk Power can call themselves operationally profitable.

PlayMade Energy
While this enterprise differs from the others in that it has not yet scaled, it touches on many principles enumerated above, and is worth monitoring. Daniel Sheridan’s success is based on a high school level physics principle: there is a lot to gain in the transfer of potential to kinetic energy. When Sheridan visited a school in Uganda in 2008 he was captivated by the massive amounts of energy that the schoolchildren expend at recess. He knew that if he could capture this energy and repackage it, he would bring great things to a village that did not have much access to power before.

With this in mind he designed the Energee-Saw, a seesaw that generates electricity as its user bounces on it. (This concept resonates in the PlayPumps model, which employs the same principles, but delivers clean water in place of clean energy.) The generated energy can be used to power LED based lighting, , mobile phones and radios. Five to ten minutes of play yields enough electricity to allow the school to stay open for an evening education session. Sheridan uses local materials to benefit the community further, as well as to decrease the project’s carbon footprint. Having recently partnered with Build a School, an organization that works to erect schools in the developing world, PlayMade Energy is on the right track and will hopefully experience nice growth.

There are many organizations installing energy systems, but there is one goal: to bring homes, businesses, schools and communities the electricity needed to live life after the sun goes down, and to tap into the great power that has become essentially crucial in sustainable development.

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