Taita Taveta County, Kenya – Biogas Partnership for Farming Communities

Taita Taveta county lies approximately 150km northeast of Mombasa and 300km southeast of Nairobi in Kenya. Residents of Wundanyi subcounty were approached in 2013 by a newly-formed NGO, Taita Biogas, to pilot new biogas installations, due to the high prevalence of cattle farming in the region. This gives ready availability for high-quality feedstock for biogas digesters in the form of cattle manure. To date, the NGO has installed over 600 household-scale biodigesters in the country, and has completed two institutional biodigesters for schools in the region, with a third under construction. These institutional-scale installations will use human and food wastes as feedstock rather than cattle wastes.

The business model for the NGO provides an opportunity for consumers who would not be able to afford a biodigester installation outright to install a system. Taita Biogas covers half of the cost of installation, and also arranges contractors to construct and commission the system. The households then pay the remaining amount for installation, usually in the region of KSh145,000 (GBP1,035). In recent years the NGO has expanded operations through partnership with the Micro Enterprise Support Project, another Kenyan NGO supporting farmers venturing into macadamia nut and French bean farming. Whilst this partnership has not been successful to date, due to MESP pulling out in 2017, a new partnership with the organisation is to be formed with additional funding, and a loan finance option provided through the MESP to members for biogas installations.

Household biodigester user Honorata Nyange cleaning utensils at her Lushangonyi home in Taita Taveta County, Kenya. Photo/Malemba Mkongo, star.co.ke

There are a range of benefits available to the farmers who have installed these biogas systems, as well as the institutional-scale digesters installed by regional schools. Households have reported a huge reduction in the amount of money and time invested in collecting firewood and purchasing charcoal, and the institutional users have reported a 50% reduction in the cost of purchasing firewood for cooking since installation of the digesters. In addition, this scheme is innovative in that householders are coordinating with the NGO to apply for regulatory permission from the Energy Commission of Kenya to bottle and sell biogas on the local market, as self-producers. Biogas sells for comparable prices to natural gas on the Kenya market (KSh200/kg (GBP1.43/kg), compared to KSh175-250 (GBP1.25-1.78/kg) for natural gas), and should regulatory permission be granted, these biogas installations have the potential to become an additional revenue stream for the farmers. Finally, household users have reported significant improvements in both cooking quality and ease of use when using biogas compared to firewood or charcoal, with a reduction in combustion residues and ease of lighting when using biogas as a fuel source.

The NGO is currently expanding its operations both on a geographical and technology-focused scale. As well as its operations in Kenya, the NGO is conducting feasibility studies for joint biogas/solar photovoltaic/solar water heater applications in Ethiopia, as well as local training workshops in partnership with an Ethiopian NGO, MCMDO-REESDE, for solar water heating technology, both in terms of installation and local construction.

– Daniel Kerr, UCL

References

Star.co.ke (2017) Taita Taveta Dumps Firewood for Biogas. Available at: https://www.the-star.co.ke/news/2018/02/12/taita-taveta-dumps-firewood-for-biogas_c1707691 [Accessed 10th March 2018]

Taita Biogas (2018) What We Do. Available at: http://biogas-taita.de/home.php [Accessed 10th March 2018]

Pay-As-You-Go (PAYG) Models for Cooking Fuels – Innovation for the Poorest Consumers

Daniel Kerr from UCL writes on innovative pay-as-you-go models in use for cooking energy service provision.

In the last 2-3 years, a handful of thermal energy services companies in the developing world, specifically in Sub-Saharan African countries, have begun to take advantage of pay-as-you-go (PAYG) consumer financing models in their energy businesses. These models have significant advantages in comparison to direct purchase, hire-purchase or micro-credit models when dealing with the poorest consumers in societies, for example those living in informal settlements in urban or rural areas. Some companies are taking advantage of these models for selling clean cooking products, such as stoves themselves, whereas others are using this payment structure for cooking fuels.

One company in Kenya taking advantage of these innovations is KOKO Networks. This organisation seeks to offer an integrated neighbourhood-level clean cooking solution with smart technology, via their KOKO points, cloud-connected commerce hubs where consumers and vendors can come to refill the products on sale or make purchases. Currently the company is offering the SmartCook product at these sales points, which is a two-burner clean cookstove with an integrated fuel canister. The fuel used is marketed as Mafuta smart, which is an ethanol fuel derived from molasses manufacture.

What is particularly innovative about this system is that the sales hubs for the company have in the automated purchasing stations for the fuel for the cookstove system. These dispensers refill the provided fuel canister (known as a kibuya smart canister) with the cookstove system, and customers can refill their canister from as little as KHS30 (US$0.29) at a time, offering significant flexibility for the consumer, without the “poor people’s premium” (higher per-unit prices charged for small amounts of consumable products) seen in other commodities. The company operates on a concession business model, with interested parties either setting up their own fuel supply arrangements for the fuel to service their settlement, or purchasing equipment and fuels from KOKO themselves.

KOKO Networks KOKOPoint in store in Nairobi. Customers can purchase a stove or replacement fuel from the kiosk. Image: http://www.globalhearthworks.org/koko/

Other companies in Kenya are taking advantage of PAYG models to enable greater access to their products and services as well. In Nairobi, PayGo Energy is a distribution service for LPG fuels that is using pay-as-you-go services to bring LPG fuel access to a greater number of consumers. The service begins with the installation of an LPG stove, cylinder and smart fuel meter in the home. This smart meter is at the core of the service the company offers, as it automatically communicates to the company when the fuel level is running low, whereupon the company arranges delivery of a replacement, full cylinder to the household. In addition, the system support mobile payments and ordering of fuel replacements, allowing customers to purchase as little as a day’s worth of LPG (around US$0.50) at a time. This logistics system has been adapted to informal settlements, allowing uninterrupted supply to households in informal settlements via motorcycle.

PayGo Energy stove and fuel canister in a house in Kenya. Image: https://blog.catalyst-fund.org/delivering-modern-energy-in-kenya-building-on-mobile-money-eb0eba1960da

Other organisations are beginning to see the benefits of integrating mobile payment technology with a pay-as-you-go fuel payments model for energy services. KopaGas in Tanzania are another company using smart LPG metering to minimize the challenges posed by last-mile distribution which are typical in providing thermal energy services to communities. This smart gas meter system allows the company to deliver cylinder filling services or replacement full cylinders to communities efficiently, minimising distribution costs. In addition, the company offers a pay-as-you-go service for LPG fuel, as well as offering pay-over-time services for both fuels and cooking equipment. KopaGas has been partnering with EnviroFit, an established LPG equipment and fuel distributor in East and West Africa, in order to scale their service reach.

Through these cases, the market opportunity for offering clean cooking fuels and technologies as an energy service, using innovative fuel and equipment payment models to enable access for the widest range of consumers, can be clearly demonstrated. KOKO Services and KopaGas/PayGo Energy may be using different technology options, but the commonalities in approach exist: offering consumers the ability to purchase small amounts of fuel at a time, via a convenient payment method (either via mobile, at a central filling station, or both), and in the case of the LPG companies, offering consumers the option of household delivery. Through this combination of factors, these companies are breaking the traditional barriers to household thermal energy service delivery, allowing consumers who previously would not have had the financial capacity to afford modern cooking fuels the ability to access these technologies.

– Daniel Kerr, UCL Energy Institute

References

Global Alliance of Clean Cookstoves (2017) “Pay-as-you-go” technology to boost access to cooking fuel. Available at: http://cleancookstoves.org/about/news/05-30-2017–pay-as-you-go-technology-to-boost-access-to-cooking-fuel.html

KOKO Networks Home: http://kokonetworks.com/

PayGo Energy Home: https://www.paygoenergy.org/

KopaGas Home: https://www.kopagas.com/

Kitonyoni Solar Mini-grid and Integration of Thermal Energy Services

Binu Parthan from SEA writes on his recent visit to the Kitonyoni Solar Mini-Grid project, part of the University of Southampton’s efforts for the Energy for Development (E4D) project they lead.

The solar mini-grid at Kitonyoni near Machakos in Makueni County was financed by the UK government and commissioned in 2012 by the STEPs partner The Sustainable Energy Research Group at University of Southampton. The Kitonyoni Solar mini-grid is managed by Makueni County Solar Energy Co-op Society Ltd which is owned and managed by the community.

Management of the Solar Electric Cooperative and manager of the mini-grid business. Image: Sustainable Energy Associates

In July 2016, I travelled to Kitonyoni to visit the solar min-grid and meet with the community. While at Kitonyoni, I met with Joseph, Monicah, William and Shadrack from the management Makueni County Solar Energy Co-op Society Ltd and also with Stephen, the manager of the mini-grid and energy service business. With the community leaders and the manager of the mini-grid, I visited several businesses and households that were consuming electricity from the cooperative to understand the business model. The solar electric cooperative seems to be professionally managed and financially sustainable. They operate on a for-profit business basis and the financial accounts reveal that the operation is financially sustainable. The electricity cooperative uses a pre-paid card system for electricity sales and payments which seems to be working well. The electricity consumers are more conscious of energy use and payments and the cooperative is also happy with the upfront collections. The number of shops in the Kitonyoni market has significantly increased since the solar mini-grid was commissioned and the value of the land in the area has also almost tripled. However, the tariff charged by the solar electric cooperative is considerably higher than the public electricity utility but the community has been willing to pay a higher tariff due to better availability and reliability.

One of the new businesses established in the Kitonyoni market powered by the solar mini-grid. Image: Sustainable Energy Associates/span>

STEPs project team at University of Southampton had carried out a survey to examine the possibility of integrating thermal energy services into the existing electrical energy service business model. The results showed that 90% of the households in Kitonyoni use firewood for cooking which is available without cost to the community (Bahaj and Kanani, 2016). While the households spends over 5 hours to gather firewood, there is limited interest in switching to cleaner cooking options such as LPG which involve additional financial expenditure. The opportunity to integrate a solar thermal energy service along with the electricity service seems rather limited due to limited scope and demand for commercial fuels. The firewood is available freely in the area and LPG distribution networks are not available in the village.  Therefore currently, there does not seem to be a business case for introduction of an LPG franchise model and integrate the model into the solar electricity business. However some thoughts that I shared with the community were:

Since households and restaurants are cooking in separate rooms than their houses and as there is a preference for community schemes, will a community electric cooking scheme succeed? This may be relevant as on most days the battery bank of the solar mini-grid seems to be fully charged in the early afternoon and this could provide an opportunity for a central cluster of electric induction cookers which people can use to cook on a pay per use basis(similar to battery charging) to the cooperative.

It is possible that people may opt for efficient Cookstoves/Jikos if available on a hire-purchase/PAYG basis and reduce the amount of firewood to be collected resulting in time savings. An efficient Jiko will cost 45 $ which could be offered on a loan basis with daily/weekly/monthly payments to people by the cooperative for 6 months to 1 year tenure. These funds could be revolved over the time period to reach other members.

A differential tariff with a lower tier-tariff for the shops and establishments that use electricity during the day will likely improve the revenue model of the cooperative and can increase the utilisation levels. Such a tariff regime could allow the use of induction electric cookers at households during the day. Such a development could result in increasing sales and revenue and improving the business viability.

Cooking using firewood and a metallic stove in Kitonyoni. Image: Sustainable Energy Associates

Therefore the technology options for thermal energy and cooking in Kitonyoni is electric cooking or efficient Cookstoves with the possible business models of pay-per-use or hire-purchase respectively. A differential tariff with lower off-peak tariff could also allow electric cooking during the day time and improve the business model. These options are not entirely obvious and needs to be investigated and defined. This approach will certainly face stiff competition from free biomass availability and availability of free time for fire-wood collection.

Dr. Binu Parthan

What Business Model is Best for LPG Dissemination?

In the previous two posts of this series on LPG in developing countries, we have examined the concepts of fuel-switching to LPG from other, less sustainable fuels, and some ways of promoting LPG access in developing countries through government interventions. However, the development of LPG markets with private and public-private participants in developing countries has been slow, and few interventions attempted by governments and third-sector actors have had success in developing these markets.

Developing a private market for LPG in developing countries requires the existence of business models that are relevant to the technology and fuel source, as well as adaptable to changing consumer and market conditions.

Is fee for service a good model for LPG?

Fee-for-service business models, where consumers pay a monthly fee to an energy service company for their energy services, whilst the company maintains ownership of the system and maintenance/operations responsibility, have been used to great effect in other renewable technology sectors in allowing users to access energy services at a significantly reduced up-front cost, removing one of the primary barriers to business success and market development for renewable technologies.

Applying a fee-for-service business model to LPG equipment and fuels could help to promote the development of an LPG services business in developing countries. The high up-front cost of converting from other fuels to LPG can be mitigated through a monthly payments scheme, allowing the user to access the technology where otherwise they could not. This can be applied to LPG fuels as well as LPG-utilising equipment, such as water heaters or cooking equipment. However, there are disadvantages to the fee-for-service approach as a transaction model for LPG also. Equipment costs for LPG are generally low, particularly for cooking use, with the majority of the cost coming in fuels. Fuel costs are generally very high compared to other renewable thermal technologies. As such, direct purchasing of LPG equipment is within reach of a large proportion of consumers, mitigating the usefulness of a fee-for-service approach to spread out high equipment costs. Applying a fee-for-service transaction model is an approach that has been tested in rare cases: LPG fuel financing is used by some companies, for example VidaGas in Mozambique, where users can pay off cylinder purchases over a period of 2-3 months.

Appropriateness of the most common thermal energy fuel types for common renewable energy business transaction models. Source: Robert Aitken, 2016. [1]

Other models for LPG dissemination

Some countries, for example Ghana, South Africa and Nigeria, have started implementing a cylinder exchange model for LPG fuels, as opposed to previous models where cylinders were bought as a unit for a much higher price. These cylinder exchange models have been used in the domestic LPG sector in Europe for many years, and involve exchanging empty cylinders at central locations for full cylinders, with the user only paying for the fuel in the new cylinder. This involves the energy service company retaining ownership of the cylinders in circulation, allowing the user to access fuel at a lower cost.

A vendor inspects cooking gas cylinders at a cylinder exchange site in Kenya. Source: http://empoweredweb.blogspot.co.uk/2011/07/opportunities-in-gas-business.html

Whilst this model benefits the users greatly, from a company perspective it is challenging, requiring a large up-front investment in terms of cylinders and filling equipment for LPG, as well as bulk purchases of the fuel itself, and the need for safe and secure storage of the fuel. However, with policies to promote business development in place, for example start-up grants or low-interest credit underwritten by governments/NGOs, this model has the potential to greatly increase access to LPG in developing countries.

– Xavier Lemaire and Daniel Kerr, UCL, February 2016

[1] Aitken  Robert (2016), Technology and Business models for thermal energy services, STEPs toolkit, Under print.

Energy for Development Case Study – Replication of Rural Decentralised Off-grid Electricity Generation through Technology and Business Innovation

Prof. AbuBakr Bahaj and Rucha Amin from Southampton University write on the University’s Energy for Development (E4D) project, providing renewable and reliable power to rural Kenyan communities.

Reliable and affordable sources of energy are fundamental not only for wellbeing, but also for economic growth and poverty reduction. Rural communities that do not have access to the national electricity network are also deprived of the associated benefits in health and quality of life provided by electrical services such as lighting and refrigeration. Fulfilling the energy needs of developing countries without compromising the environment is a challenge requiring imaginative policies and methods.

The approach adopted by E4D in Kitonyoni, Kenya focussed on a replicable, community based solar mini-grid electrification system aimed at invigorating village trading centres and promoting business innovation. The core of the project is based on a 13.5 kWp solar photovoltaic (PV) array with integrated rainwater harvesting system coupled to a mini-grid. The latter provides power to all trading centre buildings (shops, cafes, schools, health centres, churches etc.) and local businesses that in turn are able to provide charging facilities for electrical appliances, such as LED lanterns and mobile phones, to customers.

A major focus of this project has been to establish an economically sustainable system whereby the community contributes to the project and is responsible for the operation and maintenance of the plant. Income is generated for the cooperative which is also set up as an energy supply company (ESCO) through membership fees, local sales of electricity and share ownership. This income covers the running costs of the project, provides finances to the community as well as contributing to the recovery of the capital cost of the project.

The E4D project solar installation in Kitonyoni, Kenya. All images Sustainable Energy Research Group, University of Southampton

Since the installation in September 2012, there are clear indications that the trading centre in Kitonyoni is being transformed with land prices increasing, a number of new buildings constructed, new businesses opening and existing business owners reporting profit increases.  There has also been a marked improvement in healthcare provisions with a newly donated, fully electrified maternity clinic in operation. Furthermore, one replication project has already been carried out in Bambouti, Cameroon with a third installation in Oloika, Kenya planned for later this year.

For more information: http://www.energyfordevelopment.net/

– AbuBakr Bahaj and Rucha Amin, Southampton University

Clean Cookstoves and Entrepreneurship in Kenya

Daniel Kerr from UCL reports on recent partnerships for clean cookstoves in Kenya.

A number of international organisations are realising the benefits of cleaner methods of cooking in developing countries. In particular, the Global Village Energy Partnership (GVEP) are continuing to make progress in providing clean cookstoves and cleaner cooking fuels in Africa, through an ongoing partnership with the Global Alliance for Clean Cookstoves (GACC). A recent conference in Nairobi, the National Stoves and Fuel Conference, was co-hosted by the GACC and the Clean Cooking Association of Kenya, where GVEP was able to highlight the progress made under the Spark Fund Program, an initiative from the GACC under which GVEP was awarded US$375,000 in July 2013.

Under the Spark Fund Program, GVEP is working with local producers of clean cookstoves in the Central and Kisumu areas of Kenya to develop new stove designs with improved performance, particularly in terms of thermal efficiency and emissions reduction. Partnerships with local testing centres and universities are also in place to quantify these reductions and efficiency gains, with the aim of optimising designs whilst maintaining local manufacturing ability.

The Spark Fund Program is an effort to address the research and development gap often seen in micro-enterprise, due to the lack of funding and expertise. Engaging micro-enterprises in the development of new cookstove products is seen as a key step to further developing the clean cooking market in Kenya. As explained by Laura Clough, a technical specialist at GVEP: “As the sector looks towards developing new standards for improved cookstoves and making them cleaner and more efficient, it is important that local enterprises are able to participate fully in this process”.

Entrepreneurship and market development are both relevant to the STEPs project. Through the establishment of public-private partnerships with private organisations and entrepreneurs, and the development of market mechanisms and a market-oriented approach to program development, a faster pace of model penetration and a more sustainable, cross-applicable model will be developed.

– Daniel Kerr, UCL Energy Institute

More information on the National Stoves and Fuel Conference and GVEP’s participation can be found here: http://www.gvepinternational.org/en/business/news/gvep-called-showcased-its-work-cookstoves-international-conference-kenya

Global Village Energy Partnership on Facebook: https://www.facebook.com/gvepintl?fref=ts

GVEP Home: http://www.gvepinternational.org/