NYT: Energy poverty on the agenda for 2011

Energy poverty may not mean much to most people because up until now no one has bothered explaining the concept.

And even though “energy poverty” was not mentioned directly, the knowledge vacuum began to be filled on December 24th when the New York Times published African Huts Far From the Grid Glow With Renewable Power, an excellent overview of how renewable energy and energy efficient technologies are dramatically changing the lives of rural African populations that lack access to modern energy.

The story leads with the example of a family in rural, off-grid Kenya with no access to electricity. However, like two-thirds of Africans, the family does own a cell phone, which it re-charges in a neighboring village.

The family recently made a leap and invested US$80 in a Chinese-made solar powered electricity generator. The unit is powerful enough to re-charge a cell phone and run four lights.

Thanks to the technology, the family is today able to save money on korosene, batteries, and other energy poverty-related expenses. Additionally, the children’s grades have improved thanks to the increased illumination and the family is able to generate a small income by renting its tiny excess of electricity to neighbors in need of a cell phone charge.

The article goes on to discuss the trend towards small-scale renewables that is spreading across the developing world.

Below are our comments on key passages in the story.

“The UN estimates that 1.5 billion people across the globe still live without electricity,…” According to the IEA (International Energy Agency, a U$35 to U$60 billion annual investment is needed over the next two decades to significantly reduce the number of people without access to electricity. The big question is, where is that money going to come from? Eliminating government subsidies for oil companies seems to us like a good place to start.

“There is no reliable data on the spread of off-grid renewable energy on a small scale, in part because the projects are often installed by individuals or tiny non-governmental organizations.” We are aware of one global initiative (of which The Charcoal Project is a participant) set to launch in 2011 which will aggregate manufacturers and distributors of energy efficient technologies. We think having global trade groups will add muscle to the various sectors in seeking funding, opening markets, and establishing standards.

The sectors that we’ve identified so far include illumination, sustainable alternative fuels (biogas, micro-hydro-electric, improved biomass, wind, and solar), water filtration and treatment, and energy efficient cooking and heating technology.

“Yet while these off-grid systems have proved their worth, the lack of an effective distribution network or a reliable way of financing the start-up costs has prevented them from becoming more widespread.” In addition to creating a trade group representing an array of energy efficient technologies, a global umbrella organization would be able to engage multi-laterals, governments, foundations and other donors in channeling funding.

“The big problem for us now is that there is no business model yet,” (according to one NGO executive). This is another area where the establishment of a global network would allow NGOs and entrepreneurs to learn and reapply best practices. There is hope that groups like the Global Alliance for Clean Cookstoves will deliver these types of solutions. But the Alliance is focused on only one sector of the energy poverty pie.

“Finally, these products exist, people are asking for them and are willing to pay,” (says the NGO exec). “But we can’t get supply.” Without a global partnership to assess and quantify the needs for these technologies, it will be difficult to convince manufacturers and investors to dedicate resources to growing this business. A partnership could help establish distribution channels and direct funding. It could also help establish energy efficiency standards that could help generate financing from the carbon credit market.

In some ways, what is needed in an IEA for the energy-poor.

“A $300 million solar project is much easier to finance and monitor than 10 million home-scale solar systems in mud huts spread across a continent.” This may be true from the perspective of large-scale multi-lateral-type funding seeking clear security on their investment. Still, various studies show that the market at the base of the pyramid has enough purchasing power to attract hordes of social entrepreneurs.

“…money does not flow to the poorest areas. Of the $162 billion invested in renewable energy last year, according to the United Nations, experts estimate that $44 billion was spent in China, India and Brazil collectively, and $7.5 billion in the many poorer countries.”

“Only 6 to 7 percent of solar panels are manufactured to produce electricity that does not feed into the grid. Still, some new models are emerging. Husk Power Systems, a young company supported by a mix of private investment and nonprofit funds, has built 60 village power plants in rural India that make electricity from rice husks for 250 hamlets since 2007.” We need more Husk Power Systems!

“What has most surprised some experts in the field is the recent emergence of a true market in Africa for home-scale renewable energy and for appliances that consume less energy. As the cost of reliable equipment decreases, families have proved ever more willing to buy it by selling a goat or borrowing money from a relative overseas, for example.

The explosion of cellphone use in rural Africa has been an enormous motivating factor. Because rural regions of many African countries lack banks, the cellphone has been embraced as a tool for commercial transactions as well as personal communications, adding an incentive to electrify for the sake of recharging.”

One company we’ve bet on is BioLite, which manufactures a clean cookstove with electrical co-generation capacity. And this is one word we like a lot: co-generation.

“In another Kenyan village, Lochorai, Alice Wangui, 45, and Agnes Mwaforo, 35, formerly subsistence farmers, now operate a booming business selling and installing energy-efficient wood-burning cooking stoves made of clay and metal for a cost of $5. Wearing matching bright orange tops and skirts, they walk down rutted dirt paths with cellphones ever at their ears, edging past goats and dogs to visit customers and to calm those on the waiting list.”

Although some initial subsidies may be needed, we believe social entrepreneurs are the key to the large-scale deployment of energy efficient technologies.

“Of course, such (photo-voltaic) systems cannot compare with a grid connection in the industrialized world. A week of rain can mean no lights. And items like refrigerators need more, and more consistent, power than a panel provides.” We read this as representing a huge opportunity for the manufacturers of improved and cheaper battery technology.

So, thank you, Elisabeth Rosenthal and The New York Times for this wonderful and inspiring story!

And stay tuned for major announcements in the launching of a global partnership for the relief of energy poverty!