What is the point of conferences?

June 16, 2010

Are renewables the answer to Africa's energy deficit?

June 16, 2010

What should Oxfam be doing on renewables? Your advice, please

June 16, 2010
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Wisdom of crowds time. We’re doing some thinking on renewable energy and energy poverty (which affects about 1.5-2bn people), and thought we’d pick your brains. My colleague John Magrath has written this guest blog as an opener, and I’ll run a few posts on energy-related issues over the next few days. Over to John:

As an NGO we’ve never done much work in the field. But increasingly, we’re deploying renewables because they make financial sense for

solar lamp-lit foodstall in India

solar lamp-lit foodstall in India

communities and for us – such as solar panels to pump water in Turkana. Now with thoughts of “low carbon development” increasingly in mind, a number of Oxfam country offices are thinking of trying something on a larger scale. But what exactly? We don’t want to duplicate what others are doing, or, it has to be said, go the same way as the many attempts at renewable energy programmes that have only partially succeeded, or even failed outright.

A classic example of partial success appears to be the much-heralded roll-out of “multifunctional platforms” (MFPs) across West Africa. Championed by UNDP, these are diesel engines to operate milling machines and a generator to produce electricity, to be owned and operated by women’s organisations, and ultimately, powered by renewable fuels in the shape of jatropha grown by the women.

MFPs tick all the donors’ boxes – innovation, production, income generation, light, gender, renewable energy etc….But writing in Energy Policy (vol 38 (2010) 1192-1201), Ivan Nygaard finds MFPs are not multifunctional at all – they can only do one thing at a time and most of them end up only milling. What is more, many of the women’s organisations might still own an MFA, but employ a miller to run it. Nor has jatropha proved to be a viable fuel, and has been quietly dropped from new programmes.

This seems to illustrate a key dilemma. So far, neither the market nor the state have been sufficiently effective in providing enough people with the different forms of energy that they need. And to fill the gap in the middle, and with the best of motives, have swarmed all sorts of worthy initiatives – but – I sense – to relatively limited effect.

There’s incredible inventiveness and dynamism in the middle, inventing “stuff” like new stoves and creating new business models, to reach the base of the pyramid – a bewildering hybridisation of social entrepreneurs, NGOs, civil society organizations and social investors. But most of those “models” turn out to be little more than projects and not replicable.

As the MFP example hints, maybe it would be sensible to start by enrolling existing small businesses – like millers – instead of setting up new (and less efficient, supposedly co-operative) associations to run things….

how to get to scale?

how to get to scale?

Maybe we have to be clearer about what the market can effectively deliver, and find ways to support and link both entrepreneurs and potential customers. The market is increasingly good at supplying “gadgets”, small stuff (but with big welfare impacts) for individual or household use, notably solar lanterns. What the market can’t provide is generally anything big that requires an upfront investment that poor individuals or communities can’t afford.

On the other side, maybe we have to renew demands on governments to provide energy as a public service. In Nepal a new consumer movement of electricity user groups is campaigning to extend the grid into villages and has already electrified 176,000 rural households in a little over four years. The 20:80 scheme – communities contribute 20% of the cost of connection, the government 80% – is “communitising” the grid. Despite the long and frequent power cuts, many people prefer power from the grid to the hassle and costs of maintaining off-grid power plants. Communities assume a role in running their grid locally and making it more efficient. See Down to Earth (vol 18, no 24, Monday, May 03, 2010).

So, readers, am I being naive or foolish to think the state or the market can be reformed/transformed to provide energy needs? Am I underestimating the vibrant potential of initiatives in the middle? And where do you think Oxfam could go with this?

20 comments

  1. For one thing, I think that there is an area between the “gadgets” created by the market and the large-scale electrification projects taken on by governments that can still be served with a combination of expertise from NGOs and grant money from funders (or even through community loans from microfinance institutions). Things like micro-hydro facilities that electrify a community but not much more. Comparatively little maintenance and lower cost. I’m interested in seeing what other people write.

    http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22332062~menuPK:3266877~pagePK:51236175~piPK:437394~theSitePK:73154,00.html

  2. According to the government’s own independent body the Committee on Climate Change, offshore wind in the UK could provide us with enough energy for current demand and to export –
    http://www.theccc.org.uk/news/press-releases/598-new-study-shows-potential-value-of-uks-offshore-wind .

    Having said that – major energy companies building oil and gas infrastructure have a terrible record of trampling local communities (e.g. Shell in Rossport http://en.wikipedia.org/wiki/Shell_to_Sea) – so there is plenty of reason to think they would do the same if they were building renewables

    Ultimately the answer in rich and poor countries needs to be in the community – and many developing countries with strong village communities are perfectly set up for decentralised, socially owned energy from wind and solar, even if it is less ‘efficient’ an(http://www.greenpeace.org.uk/blog/climate/the-convenient-solution-20070718). This is much less likely to cause resource conflicts than mega centralised projects like Desertec – who are currently focusing on Western Sahara as the centre of their plan http://www.trec-uk.org.uk/

  3. Not sure if this comes under the Oxfam umbrella, but wouldn’t advocacy to dissuade poor and rich countries from diverting or selling agricultural land to the production of biofuels be quite useful? You can have all the stoves you want, but if there’s nothing to cook on them people will still go hungry.

  4. I think you answered this at the beginning. “increasingly, we’re deploying renewables because they make financial sense for communities and for us”

    So what actions could Oxfam take given limited resources so that renewables make financial sense for more people? I’d guess that’s not much to do with new technology and more to do with bringing people together to act in community and solve their problems for themselves.

  5. I have no particular advice except to say: if you are not sure what works/is harmful don’t get involved!

    Seriously, Oxfam does a lot of good things but NGOs need to be very wary of blundering into complicated issues without being sure that they can contribute something useful.

    It may be Duncan that after you and your team do your research you find there is nothing that Oxfam can usefully contribute (effective use of resources wise) and that you should keep your focus elsewhere…

    ps. I am a big fan of Oxfam (I have even interned for OI) so this isn’t meant as a critique of you guys in general!

  6. Good people, I agree with Duncan that we must begin to look at larger infrastructure issues -like energy -if we are to provide a backbone for accelerated development ‘by the people for the people’. The subtext seems to be that energy is not a priority within the development debate and should be left to the private sector with govt providing regulation and an ‘enabling’ envirohment. Yet we know that without energy….options to move rural development forward, open up possibilities for post production facilities, jobs, innovation etc are limited. This is true whether you are in Norway, Tajikistan or Zambia. I applaud UNDP for at least experimenting with the MFPs, more of that needs to happen. At the end of the day, even for people experiencing poverty, if the model for providing energy doesn’t make ‘business sense’ ie give good return on whatever the size of investment, it won’t be sustainable. We’ll never know though unless more people experiment and encourage low cost innovation. NGO’s should be more ambitious in suggesting options to communities and linking with the private sector. See the greenhub.org website at MIT for a large energy program, that includes the community, in South Africa. Takes a lot of setting up but the option is to leave rural areas in the 19th century when a lot of forward movement today (including this conversation) depends on having access to energy.

  7. Dear crowds – great! thanks! Lots of wisdom there to ponder. And thanks for the good links. Some thoughts from me in response are..

    I think Muthoni articulates well the motivation behind why Oxfam is thinking of this. Nic – you’re very wise to advise restraint! But given this motivation, and Oxfam’s pretty decentralised structure I think country programmes will start trying some experiments anyway. Experiment is good, as Muthoni says; leaps in the dark with both feet not so good, hence this call for advice…

    OK, here’s one big dilemma (I think). It’s got to make “business sense” to be sustainable. But how to achieve that? e.g.in some situations where it’ll never make business sense (definition?)(so those communities aren’t permanently deprived of energy and wither away?)and,how do you do it when the social ownership is vital as Ken says but as Tim says, probably less efficient in a business sense – what’s the balance that does work?

    Also, situations for RE seem so highly location specific (is energy unique in that?)? e.g. Josh points to Nepal – although not at all easy it strikes me there are good opportunities for developing “in-between” sustainable decentralised energy systems there because it’s got fairly abundant untapped resources (water for mini-hydro, animals for dung for biogas – unlike some places).

    A few other things – Tim, re Desertec – I’d previously assumed this is “a good thing” but I heard a presentation recently that shocked me about the (colossal) amount of water this technology requires (in a desert!)…hmmmm….but it raises again the dilemma: can you do something 100% benign on a big enough scale? e.g. apropos of Ben’s post, it reminds me of passive solar greenhouses that GERES makes in Ladakh (and Oxfam has adopted and is building in Tajikistan)which are 100% wonderful – but no matter how expanded this programme gets it can’t do a fraction of what a Desertec promises (OK, it’s different but, I hope you get my drift).

    Mark – biofuels – yes, we did a report on this in 2008, and land grabs (for food or biofuels) will be a big part of a forthcoming campaign…

    Right. I’m taking Michael’s advice now and getting on my bike. Thanks again and please keep the posts coming.

  8. Very interesting blog, and very interesting comments.

    What should Oxfam or other NGOs should be doing about RE?
    Tough question.

    Unfortunately, energy is a very capital intensive business, and RE is even more capital intensive than conventional sources (while operating costs are much lower, close to zero).
    That means that financing and financing conditions have a great great impact on the sustainability of investments in RE power plants.
    If we are talking about big scale, I fear that these amounts are put of reach for most (or all) NGOs, so I don’t see a big role for NGOs here.
    What NGOs could do for big scale investments is advocacy, making pressure on governments, financial institutions, and so on, to release loans at favourable conditions to promote RE investments in developing countries.
    Financial resources may be redirected to RE from the incredible amount of subsisidies that every year are granted to “dirty” energey sources (http://www.iea.org/files/energy_subsidies.pdf).

    At small scale level, financing may be easier to tackle, but NGOs should act together with MFIs: as you know, some MFIs are already offering micro-loans for RE gadgets (i.e. solar lanterns, more efficient stoves, and so on).
    I think that NGOs role could be particularly valuable here, estabilishing partnerships with MFIs in order to support loans with education to RE programmess and community-based initiatives.
    The presence of a skilled NGO should also help to avoid the risk that some MFIs may act as “sharks”…

    Basically, I share the main impression that everything you decide to do, it should have sense from a business point of view. (I have to admit that being professionaly active in financing for RE I am a “bit” biased here)

    But I also share John dilemma: “in some situations where it’ll never make business sense, so those communities aren’t permanently deprived of energy and wither away?what’s the balance that does work? ”

    Well, I really don’t know, but I suspect that the solution may lie in some kind of public-private partnerships, for instance: I (government) provide the grid and some kind of favourable conditions for financing, you (private) commit to provide energy at an affordable price that may allow you to earn a reasonable profit.
    If you don not comply with the conditions, I (government) take over your assets.

    These are my own 2 cents, for the moment.

    Really looking forward to read more on the topic.

    Stefano

  9. I would like to add something for people who are into protecting our earth and environment. Now, with all the global issues that we have to embrace into our lives and our childrens lives, we should all do our part to help a least a little bit. Why not Eliminate your Electrical Bill and Save Thousands a year with Solar Panels for your Home, they are extremely easy to build and this will be an easy way for you to do your part in helping our planet and save a tonne of money at the same time. Think about it.

  10. Hi John, I think your reflections are spot on. I do believe that a “tamed” market (where at least a component of the business is socially inclined and directed) can expand its reach to more ambitious products that the supply of gadgets. One of the major problems is often financing. But isn’t it surely better to support the lively initiative of enthusiastic and talented entrepreneurs who are spotting an opportunity for making money than coming up with well thought models born around a donor’s table?

    As a rule of the thumb, if you can convince a successful trader at the local market to engage in and take a real risk with your idea, then you have a chance that the project will succeed.
    As per the role of the state, the engagement of authorities is essential at some level for sure. But let me gloss over this and go straight to your final question, which I find most intriguing: “What is the role of external development agents such as Oxfam”. We have been thinking a lot about this as it is relevant to virtually all the nearly 4000 members of our HEDON Household Energy Network.

    This question leads to a few related ones which should be answered first: “why are projects failing or not replicable or not scalable?” and indeed, “why are services not there in the first place?”

    Inevitably, when looking into the details, a complex picture starts to emerge. Structural and logistical deficiencies, lack of access to capital, real or perceived market risks, dysfunctional authorities, policies which favour the status quo, lack of capacity and low levels of awareness are among some of the most obvious market barriers.

    According to our experience, what development organizations tend to do is to leap over all the barriers listed above by using their money, other resources, connections, and capacity. With sufficient money and organisational capacity it is relatively easy to overcome market barriers. ; At some point they sit back expecting the project to carry on on its own and marvel when this does not happen. This shouldn’t come as a surprise given that the same barriers in place before the beginning of the project, which probably stopped the services to be delivered without external intervention, are usually still there unchanged and will continue to prevent the services to be delivered without external intervention. In some cases new barriers have been created – many development organizations tend to work with the poorest and most marginalized parts of society, and new technologies can become associated with perceived social stigma. In addition creating sustainable markets is very difficult for charities since there is frequently a perception that when a charity is involved things should be free: a recent survey of HEDON members showed that 40% of them struggle with that. Implementing a project and addressing barriers is not necessarily the same thing. Furthermore it is not sufficient that a given investment or business merely ‘makes financial sense for us and for communities’ unless it is also an excellent investment compared to all the other things that an entrepreneur or consumer could be doing with their resources.

    Consider installing solar panels over the roof of a school: What’s the delivery model? Financing, distribution chain, technical support, community engagement, enabling policies … if any of these factors fail to be addressed in a sustainable way, and in such a way that local people with local resources can deliver and sustain the activities the project will fail as soon as the external agencyleaves or moved onto something else.

    When we are working to create new markets through the efforts of local entrepreneurs we should also bear in mind that starting a business is difficult, and keeping it running profitably is challenging. In Western countries it is not uncommon to read statistics that less than 5 out of 10 new businesses do not survive 5 years. In even more challenging markets with new untested products, low education levels, and consumers below the poverty line, we should not be surprised with high fallout rates, even as we strive to be successful.

    This is of course a hint of a personal viewpoint. But if you want more to think about, I suggest we put your request out through HEDON on our network of energy practitioners from all over the place… you might get some intriguing insights…

    Our most recent edition of the peer reviewed quarterly journal Boiling Point is on ‘Marketing’ and has many interesting and relevant articles on this issue. You can read it at http://www.hedon.info/BoilingPoint58, and sign up for the electronic or print subscription from the website.

    Raffaella Bellanca
    HEDON Household Energy Network: http://www.hedon.info

    Grant Ballard-Tremeer
    Eco: the sustainable energy proposal development specialists: http://www.ecoharmony.com

  11. Raffaella, thanks so much, I would love to get the insights of the HEDON network.

    I was struck by a lot of things you and Steffano said but particularly your “With sufficient money and organisational capacity it is relatively easy to overcome market barriers. ; At some point they sit back expecting the project to carry on on its own and marvel when this does not happen….In some cases new barriers have been created”.

    From what you both say – and Nic said earlier – it makes me ponder, maybe the best way for people to get energy (ultimately) is actually for the NGO not to do energy directly, but to stick to poverty reduction in the way NGOs like Oxfam try to do. Maybe do that and support, say, micro-finance and lobby for social protection payments, then energy will come naturally and more sustainably…maybe?

  12. I was really impressed by Raffaella’reflections too,thank you so much (or grazie mille!).

    John, regarding your last question, I have of course no “certain” replies, but one thing NGOs in general and Oxfam in particular could do is leveraging on their experience in working with communities, in order to better understand the real needs of people (from the energy/electricity point of view)

    I mean, RE is a beutiful thing, but are we sure that people in developing countries are so interested in RE?
    Maybe they are, but maybe they are not.

    We have also to consider that RE costs and availability vary so much with location (and vary over time too, take a look at what is happening with solar panel costs, Chinese have revolutiozed the cost structure of the market, and I confident that the same will soon happen with wind turbines), and as a consequence every strategy Oxfam is going to adopt will necessarily need to take into account the local conditions (but this shouldn’t be something new, for you ;-))

    And, finally, I really think that:
    – partnership with MFIs in RE loans initiative
    – strong advocacy activity with Governments and IOs

    are two areas where Oxfam could really give a valuable contribution.

    Thank you for the debate.

    Stefano

  13. All interesting stuff. I regret I do not have time to read all the postings but I wanted to put in a statement before the end of the week end!
    The key issue for a group working on poverty is that any attempt to supply modern energy services to poor peopple should use those means that best meet the needs of those poor people. Sometimes this will be renewable, but sometimes it will not. So you as Oxfam should not limit supply options just to renewables – this would be tantamount to you saying that “they” cannot use diesel (because we are using too much diesel). If Oxfam is concerned with global warming, then tackle this issues separately where you will have most effect – that is with the large producers of greenhouse gases – and where the people affected have the greatest ability to respond – that is the richer people of the world.

  14. What is the current narrative on energy poverty?
    • Modern energy services are a necessary but not sufficient condition for development, growth and the reduction of poverty.
    • Not all forms of energy provide all energy services (electricity is required for effective lighting and for telecommunication; liquid fuels are normally required for mobile shaft power). Poor people do not often cook with electricity.
    • Utilisation of modern energy services is a function not only of the availability of energy supplies, but also of the energy conversion technology (end-use technology).
    • Energy poverty is largely a function of the lack of “effective demand” (money to translate a need into a demand).
    • Meeting the basic needs of poor people for modern energy services would have an almost negligible impact on greenhouse gases (efficient use of small amounts of fossil fuels is less harmful to the environment than use of large amounts of renewable biomass used inefficiently – see Kirk Smith et al).
    • Energy poverty will be reduced if modern energy services are used to increase enterprise productivity and therefore increasing the ability to pay for energy services. The centre of any strategy to reduce energy poverty must therefore focus on productive uses of modern energy services. Lighting and telecommunications are strongly desired by poor people, but are difficult to provide on a financially sustainable basis (unless supported by some income generating – cash – activity.
    • The focus of analysis for energy poverty reduction is the enterprise (including micro enterprises, farms etc) rather than the household
    • If subsidies are to be used, and there is strong argument that they should, then they must be “smart” (we now know what constitutes smart subsidies, but overall they are market making rather than market destroying).
    • Inanimate energy for transport and mobile shaft power (for agricultural processes) appear critically important to poverty reduction – cf the role of two wheeled tractors in poverty reduction in china (you have nothing on this most important technology). The availability of liquid fuels is a matter of the distribution of scarce resources between rich and poor, and is therefore fundamentally a matter of political economy.
    • The poverty reducing impact of the greater use of modern energy services is determined by the other “complementary inputs” (eg pumped irrigation has more of an impact if the irrigation ditches and strong agriculture are already in place), and WHO chooses the final energy end-use technology (women’s choices differ from those of men).
    • New regulatory regimes and the recent development of financially viable small scale energy conversion technology make decentralised provision of modern energy services a viable option – there are many examples (E and Co, S3IDF and many more).
    • We now know a great deal about what works where in terms of particular technologies (PV, biogas, electronics, wind, small hydro, diesel, liquid biofuels, solid biofuels, etc). The financial and technical performance of these technologies could usefully be summarised.
    • Grid electricity is likely to be lowest cost option for supplying electricity to previously un-served users. Decentralised energy supply options will be cheapest for supply electricity to remote or sparsely populated areas – be clear what is the objective.

    Some background points: By focussing on energy use at the outset (rather than “access”) puts the focus on the demand side of the problem: energy poverty results from money poverty. Energy poverty is largely about the inability to pay for modern energy services (ability to pay is not the same as the “willingness to pay”). It is probably useful to make the distinction between primary energy, energy conversion technology, and the idea of “useful energy” or (better) energy services. So the issue is how to enable poor people to gain greater USE of Modern Energy Services. This is the crucial insight that enables “decision makers” (whoever they are!) to see that the problems involves, namely: the increase the supply of modern energy forms, access to and utilisation of energy conversion technology, issues of energy conversion efficiency, and the ability of people to pay for these things. It has been said for a long time that poor people do not lack access to energy (they are sweltering in the heat from the sun), but they lack the means to make it useful to them, which usually involves the expenditure of capital.

    I think that there is also some value in distinguishing between animate and inanimate forms of energy – this then avoids the difficulties about human energy inputs to transport, land preparation etc.

    While it is obvious that there is a clear difference between electricity and other energy forms, all writers have to confront the problem of switching between the term “electricity” and energy. The world bank in particular often starts by talking about energy, but ends up only talking about electricity. If this distinction is made clear early on, then it is possible to avoid this confusion.

  15. Be pragmatic – the best energy source is wood and likely to remain so for some time. So encourage tree planting and protection of same. Coppicing is best, so some adaptive research for local conditions – it protects biodiversity, slows erosion, stores carbon underground, can be drought resistant and has the best net energy gain – what’s not to like?

    Give up on transport biofuels – they won’t work on marginal land, which is the only place they could resonably be grown.

    You have to accept that you will have to tailor livelihoods and technology to the best available energy source – wood – and not the other way around.

    Long term – just wait until PVs are cheaper.

  16. while you are out hugging trees today, imagine how lots of would have being minimize down to make way for solar panels and wind mills, or how countless valleys would be flooded to make way for a new dam.

  17. it might be a little late, but i wanted to strongly emphasise the very critical point of the megaproject desertec. in terms of putting the level of renewables efficently to a bigger level, i guess it is quite a nice idea. and this is very important.
    but honestly, to have a consortium of western companies enabling almost the whole electricity generation of northern africa, of coursing making the profits themselves, doesent sound too good to me. If it is about electricity generation there, we should support “innerafrican” tries to foster the electricity generation themselves. the generation must be in their hands, they must decide about this, and they must be able to get the wins – in the long-term it absolutely has to be all in their hands.
    however there is an not so easy conflict between the fast need of renewables and long-term self-determination (whereas i dont know, how power generation looks like right now in the region desertec wants to cover…)
    best

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