Tag Archives: business

“Fuel Switching” To LPG: Substituting More Sustainable Fuels

‘Fuel switching’ has achieved some prominence in the sustainable energy for development discourse. Fuel switching is usually used to define situations where end-users transition from less-sustainable traditional fuels, such as fossil fuels like kerosene or paraffin, or traditional woodfuels, to more sustainable sources of fuel used for the same purpose. For example, kerosene for lighting may be substituted for electric lighting from a solar home system, or woodfuels used for cooking or heating may be substituted for LPG.

Fuel switching has been particularly put forward when relating to LPG uptake in developing countries, as LPG fuel has significant benefits over other modes of fuel used for similar purposes. These can include superior combustion properties, producing less indoor air pollution with the attendant co-benefits in terms of public health. Fuel switching can lead to a reduced burden on the end-user for energy resource acquisition, such as alleviating the time burden of collecting woodfuels or purchasing charcoal/kerosene.

STEPs LPG Blog 1 Graph 1

Time spent collecting wood fuels per day by women in different African countries, 1990-2003, World Bank 2006. Source: http://ourworldindata.org/data/environmental-change/indoor-air-pollution/

Fuel switching (combined with the use of efficient cookstoves) can also lead to improved performance resulting from the use of a more energy-dense fuel, such as reduced cooking times.

STEPs LPG Blog 1 Graph 2

A comparison of different types of clean cookstoves and their relative energy consumptions and times to boil water. Source: http://www.lowtechmagazine.com/2014/06/thermal-efficiency-cooking-stoves.html

But fuel switching is not a one-way process where energy users switch to modern fuels and never come back to traditional fuels. Energy stacking is defined as when end-users in developing countries engage in multi-modal fuel usage depending on a variety of factors (e.g. variances in household income seasonally or over time), or utilising certain fuels for specific purposes (e.g. using kerosene for lighting and woodfuels for cooking).

Creating the incentive for a household, commercial enterprise or industry to engage in fuel switching can be challenging. The barriers to increased uptake of sustainable energy sources and more-sustainable energy equipment, such as solar home systems or LPG cooking apparatus, are well-documented [1] [2]. These can include higher costs for fuels, high initial investment costs putting systems/equipment out of reach of users, and problems with fuel availability, for example in distributing LPG fuels to remote rural areas.

These issues will be addressed in the next article in this series on the STEPs Blog, “Methods of Promoting LPG Uptake in Developing Countries”.

— Xavier Lemaire & Daniel Kerr, UCL Energy Institute, February 2016

[1] Pandey & Chaubal (2011) Comprehending household cooking energy choice in rural India. Biomass & Bioenergy, Vol. 35, pp. 4724 – 4731.

[2] Rai & McDonald (2009) Cookstoves and Markets – Experiences, Successes and Opportunities. Available at: http://www.hedon.info/docs/GVEP_Markets_and_Cookstoves__.pdf#

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SMEs and Clean Energy for Emerging Markets Event – London, UK

STEPs project partners attended an event, jointly run by the DECC, Knowledge Transfer Network, Loughborough University, the LCEDN and the UKCDS, entitled “SMEs and clean energy for emerging markets: challenges and opportunities”. This event was held on the 29th September 2014 at the Wellcome Trust, London, UK. This event sought to bring together representatives from the academic, government, non-government and private sectors, to discuss the current situation, opportunities and challenges to the growth of small and medium enterprise in the clean energy sector for developing economies. Several plenary sessions were held over the course of the day, and stalls were also present from a wide range of institutions, organisations and companies, including Xavier Lemaire and Daniel Kerr from UCL, presenting the STEPs project.

The day began with an establishing session on the global opportunities for SME development in emerging markets. Presenters from Knowledge Transfer Networks Ltd, SolarCentury and SolarAid highlighted a number of challenges facing clean energy provision in markets globally, particularly in developing economies. These ranged from the challenges of replacing aging infrastructure in developed economies, to those of reaching consumers in poverty in rural areas of developing countries. Consistently highlighted were the sobering figures accepted by the international community on energy access: with over 1 billion people still lacking electricity access, and 2.6 billion projected to lack clean thermal energy access by 2020, the presenters made clear the vast potential for SMEs to bridge the gap in energy services provision to emerging markets.

Following this was a session on innovation in energy services for emerging economies. The presenters, representing X-wind, Buffalo Grid and Renovagen, were all private-sector participants in the event, being entrepreneurs involved in SMEs for clean energy development. The presentations focused on the efforts of the companies to develop products and services for emerging markets. X-wind is a company producing resilient, vertical-axis wind turbines for community-scale deployment. Buffalo Grid produces pay-as-you-go solar-powered electricity and wireless internet base stations for deployment in off-grid communities. Renovagen is a new start-up producing fast-deploying PV micro-grids for off-grid communities, as well as in disaster relief and industrial applications, based on a novel flexible PV array. These organisations shared a number of features: all were looking to expand energy services access in developing economies, and they also all identified the need to tailor the product or service to the challenges of emerging market contexts. For example, resilience was a key feature of X-wind turbines, with low maintenance requirements improving reliability. The prevalence of mobile connectivity in the developing world, particularly Sub-Saharan Africa, was also incorporated into the Buffalo Grid product design, with mobile charging being identified as a key service to offer for increased take-up of the product. This point was also discussed in more detail in the fourth session.

Participants were encouraged to network over lunch and visit the presentation booths. The STEPs project booth received a good amount of interest from researchers and entrepreneurs interested in thermal energy access, and business models for energy access more broadly.

The third plenary session focused on financing and support for SMEs, and access to finance. Representatives from the Shell Foundation, UKTI and Enclude Capital Advisory presented on available and appropriate financing routes and the challenges to financial access in emerging markets, as well as the support available for SMEs from financial, governmental and non-governmental institutions. Appropriate finance for SMEs was a key point of the presentations. In the design of financing mechanisms for small and medium enterprise in developing countries, the type of financial assistance can have a significant effect on the impact of the financing on the company, particularly in transition points between sizes of companies. For example, donor funding is most useful to start-up companies that may not be able to afford market loans for growth, whereas commercial or governmental loans/financing schemes are more useful to more established organisations.

The fourth session sought to clarify the realities of energy services for emerging economies through presentations from a number of organisations and companies with experience in emerging market projects, ranging from humanitarian and aid-sector solar lighting organisations to distributed wind generation providers. Two themes were recurrent in the presentations: the necessity of assessing the nuances of the local and regional market in designing products and services for emerging markets, and the huge potential to be found in integrating products and services in a ‘smart’ fashion, most notably through the use of mobile technology. Mobile signal access has developed significantly faster than electricity access in many emerging markets, and with the immense success of the M-PESA and M-KOPA systems, integrating financial transactions into mobile systems has been proven to be a workable business model. The design of clean energy products is also key to their success in supplanting established traditional technologies in emerging markets. This can be as simple as reducing the height of a cookstove so that it can be used more easily, but can have a significant impact on market penetration.

The final session of the day focused on the impact that academic research and evidence can have in supporting the activities of SMEs working in emerging economies. Speakers from SolarAid, Oxford University’s Power and Energy Group and DFID engaged in discussions with the room on how academic research can assist in the design of business models and market research for SMEs, as well as in simulation, social and demographic analysis and other areas. The concept of innovation synergies with academic research was also highlighted, with the academic sector being able to assist in all stages of product and service development, from needs assessment to testing and evaluation of products, to effective deployment strategies and models.

– Daniel Kerr, UCl Energy Institute