Tag Archives: financing

Why Isn’t There Greater Adoption of Biogas Technologies in Sub-Saharan Africa?

There are issues surrounding the lack of willingness to finance biodigester projects at all scales in many SSA countries particularly at the household level, lack of financial arrangements for poorer households where technology is most viable, prevailing climatic conditions beneficial but socio-economic conditions (particularly availability of feedstock and financial capacity of rural users) can be problematic.

Household-scale biodigesters can be an effective solution to providing thermal energy services to rural poor communities in the developing world. However, successful examples of biodigester programs in the past at a government or development-agency scale have mostly been confined to China, India and South-East Asia more widely. Notably, there has been a distinct lack of experience of successful biogas projects in Sub-Saharan Africa. The STEPs research project aims to address some of the reasons behind this, and propose potential solutions.

In theory, the prevailing conditions in Sub-Saharan African countries are mostly beneficial for the introduction of biogas digesters. Climatic conditions, on the whole, are suitably warm, with minimal cold periods to impact digester efficiency. In addition, target users are in abundance in rural areas, if considering the local feedstock regime. Small cattle farming is prevalent in a number of SSA countries, and subsistence farmers in rural areas often keep a small head of cattle. Given also the distributed nature of rural populations in a number of SSA countries (particularly, for example, in Eastern South Africa), household-scale biodigesters are an excellent solution for providing thermal energy services to households.

Sovacool Kryman & Smith 2015

Potential uses for biogas and waste products. Sovacool, Kryman & Smith (2015) Scaling and commercializing mobile biogas systems in Kenya: A qualitative pilot study. Renewable Energy, Vol. 75, pp 115-125, http://dx.doi.org/10.1016/j.renene.2014.10.070

However, the lack of successful experience of biogas dissemination programs or businesses can be attributed to a number of factors, first and foremost of which is the cost of biodigesters (ranging from US$30 for a rudimentary drum-type system to over US$700 for a larger household system) [1] [2], and the lack of credit facilities/service regimes to enable access to the technology for the poorest consumers. Biodigester technology still represents a significant upfront cost to a typical rural household, and micro-credit services for clean energy technologies are still in their infancy in SSA countries, with some successful experiences in countries like Kenya or South Africa for solar home lighting or electricity systems in Kenya for example, but little widespread knowledge.

This lack of end-user credit is mirrored in a general lack of energy service companies or institutions offering biodigester services, with the cost issue again a driving factor behind this. Given how critical the maintenance factor is in biodigester installations (an issue which will be explored in the next blog), this lack of service companies, integrating credit or fee-for-service business models with a maintenance and servicing regime, has hampered uptake significantly in the region. The final negative factor is in fact the converse of an advantage: whilst some households will have suitable feedstock availability, compared to average heads of livestock or agricultural waste availability in South-East Asia, SSA has a much lower proportion of households with viable feedstock availabilities. Targeting consumers and areas where feedstock regimes are good is a critical step in ensuring the success of programs or business around biogas digesters in SSA.[2]

The next post in this series will investigate maintenance of biodigesters, and the necessity of maintenance and service arrangements with end-users to ensure efficient and successful operation of biodigesters.

– Xavier Lemaire & Daniel Kerr, UCL Energy Institute

[1] Hojnacki et al, MIT (2011) Biodigester Global Case Studies. Available at: https://colab.mit.edu/sites/default/files/D_Lab_Waste_Biodigester_Case_Studies_Report.pdf

[2] Raha, Mahanta and Clarke (2014) The implementation of decentralised biogas plants in Assam, NE India: The impact and effectiveness of the National Biogas and Manure Management Programme. Energy Policy, Vol. 68, pp. 80-91

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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

STEPs Presentation at the Bengaluru SE4All Workshop

A presentation on ‘Rethinking Finance and Business Approaches for Energy Access’ was made by me at the Third International Triennial Workshop on Sustainable Energy For All : Transforming Commitments into Action. The workshop was organised by the NAM Science & Technology Centre and Society for Energy Managers (SEEM) at the green Christ University Campus at Kengeri, Bangalore during the period 21-24 February 2014. This was the third energy-related international event organised by NAM S&T Centre and SEEM and brought together a large number of energy sector experts from about 20 countries including 15 developing countries and several of them  from Asia and Africa. The five countries participating from Sub-Saharan Africa were from Nigeria, Mauritius, Tanzania, Zambia, and Zimbabwe. The workshop also adopted the Bengaluru declaration on sustainable energy for all.

An expert talk was given by me, presenting the current business and finance approaches to energy access and highlighting some of the new and emerging thinking in this space. The talk exhorted equal priority to thermal energy access alongside electricity and also encouraged the use of Public-Private Partnerships (PPPs). Several energy service business models such as PPPs, PAYG and emerging financing concepts such as crowdfunding, cryptocurrency etc were also presented. The STEPs project and its plans were also presented alongside a number of other progressive finance/business frameworks.. The interventions from the floor showed a keen interest in the issues of finance & business.

So the participation at the third triennial workshop on SE4All provided an opportunity to highlight the challenges with business and finance models in energy access and to encourage new approaches. The workshop also provided an opportunity to introduce the STEPs project, its objectives and plans to clean energy, energy access and development practitioners in Asian and African developing countries.

SE4All BP

Dr Parthan presenting at the SE4All Workshop. Image: Sustainable Energy Associates

Rethinking Finance and Business Approaches for Energy Access – Presentation – Sustainable Energy Associates

Dr. Binu Parthan, SEA