Over the last week, the EGG team has begun testing a TV package with five current customers.  The package consists of devices to power a TV (a battery and an inverter).  The customers selected for the trial already own TVs but are either not using them or are powering them with a generator or hazardous car battery and inverter set-up.  EGG is supplying the customers with newer, safer devices free of charge for two months, provided that they keep detailed logs of their usage patterns and how long their TVs last after each battery charge.  The goal of the trial is to determine which devices are best-suited to power the TVs currently on the Tanzanian market and in people’s homes, and ultimately, what to include in our more permanent TV offering.

EGG’s trial TV package includes one of several sizes of 12-volt batteries.  These batteries are larger and higher capacity than our current batteries, which are intended for small appliances such as lights and radios.  As before, the customers in the trial will charge these batteries at our charging station in Chanika.  The package also includes an inverter to convert the battery’s DC power to AC, since most of our customers have standard (20-inch, color) AC TVs.  The exact battery and inverter combination that a customer receives depends on the number of watts consumed by his / her TV set.

At the end of the trial, we will decide if supplying devices to power TVs currently on the market is a viable business.  Another option we are considering is importing TVs that consume less power, such as LCDs.  These TVs would require cheaper, lower capacity batteries and inverters than the TVs currently on the market.  Until these decisions are made, we hope that this trial will show current and prospective customers that we are serious about developing a TV package that suits their needs.

A movie house near EGG's charging station in Chanika

Kids watching TV inside the movie house

The most notable (and unexpected) part of the conference was its focus on solar devices.  Though I expected the conference to cover a variety of off-grid lighting solutions (such as off-grid power plants, battery services and human-powered solutions), solar devices was the topic of a majority of the presentations that were made.  Indeed, during the opening speech of the conference, a representative from Tanzania’s Rural Energy Agency said that the purpose of the conference was “to figure out how to make solar devices more affordable to the poor.”  In addition, a majority of the companies with exhibition booths showed variations of solar-powered LED lanterns.

Despite this, there were several ideas presented during the conference that were interesting and relevant to EGG:

• Schneider’s Battery Distribution Model
• Using Micro-Finance to Help Entrepreneurs
• Providing Services beyond Lighting

Schneider Battery Distribution Model

Schneider Electric, a global electrical equipment company based in France, recently started distributing LED lights in rural India.  The lights are powered by batteries that can be charged by the grid or a solar panel.  Schneider sells a package consisting of batteries, a charger and a solar panel to rural entrepreneurs.  Customers who have purchased LED lights but cannot afford their own batteries and chargers subscribe to an entrepreneur’s battery rental service.  The entrepreneur rents batteries to customers and swaps them every day at customers’ homes.

There are several interesting aspects of this model.  First, all parts of the business (battery ownership, charging, transportation and distribution) are sold to entrepreneurs.  While EGG is currently considering franchising the transportation and distribution of our batteries (See entry below entitled “Can We Franchise EGG Services?”), we might also want to consider selling our batteries and the charging portion of our business to franchisees in the future.

Another interesting aspect of Schneider’s model is that its entrepreneurs swap customers’ batteries every day, regardless of how much they have been used.  The advantage of this is that it prevents customers from overusing batteries and reducing battery life.  This model might not work in areas less dense than India (such as Tanzania), as transportation costs would be too high.  We might want to consider other ways to prevent our batteries from being overused though, such as requiring customers to swap their batteries every three days or using battery indicators.

Using Micro-Finance to Help Entrepreneurs

During a session entitled “End-User Finance for Off-Grid Lighting”, a few speakers made the point that the goal of companies at the conference should not be to reduce the quality of our products and services to make them affordable to the poor, but to partner with micro-finance institutions (MFIs) to make quality products and services more affordable.  There are two main issues with this idea.  First, most lighting products and services (including those presented at the conference and even EGG’s battery subscription service) fall below the lending range of typical MFIs.  Second, for better or worse, MFIs usually need to see that a loan they make to a customer has real potential to increase his / her income.  This might be harder to establish if the customer is using the loan to purchase a lighting product or service.  The speakers did mention using MFIs to help entrepreneurs (such as those used by Schneider) afford a large package or quantity of a product.   This idea would not meet with the two issues mentioned above.  If we decide to sell EGG’s batteries and chargers to franchisees in the future, we might consider using MFIs to make it more affordable.

Providing Services beyond Lighting

Finally, on the last day of the conference, a speaker from the Solar Energy Foundation argued that it is unreasonable to expect customers to be satisfied once their need for lighting is fulfilled.  He said that in many cases, it is other services (such as cell phone charging and radios) that attract customers and that lighting is simply an added bonus.  He encouraged conference participants to think beyond lighting and begin offering TVs, fans and other electricity-powered devices that customers demand.  From my experience in the field, I agree with this assessment, especially regarding the demand for TVs!  In fact, the EGG-team has started developing a battery-powered TV prototype, and this will be the topic of my next blog post.  The only question is: will we be on time for the June 11^th start of the first African World Cup?

While this account might not seem like anything special, it made me think about what it means to treat the poor as consumers and the advantages of such an approach.  Thirty years ago, well-meaning development organizations used a very different strategy – they decided what was best for the population they served and offered it to them for an artificially low price (and sometimes for free).  That day in the field, Yohana treated the group as other producers in their lives treat them – as consumers who are capable of making their own purchasing decisions.

I see two major advantages to operating this way.  First, it increases the likelihood that the service we sell will be used and valued by our customers.  Like any for-profit business, we allow potential customers to decide for themselves how they value our service, instead of deciding for them that it suits their needs best.  Those who elect to purchase our service believe it will benefit them and are thus more likely to use, take care of and potentially improve our service.

Second, operating this way allows us to provide a higher-quality, more sustainable service to our customers.  We price our service above our cost.  If we instead sold it at an artificially low price, our ability to serve current and future customers would depend on the (sometimes unpredictable) availability of outside funding to fill the gap.  In addition, because we pay attention to our profits, we invest in increasing the quality, convenience and cost-efficiency of our service in order to remain competitive.

All in all, it makes sense to experiment with using for-profit models to provide socially valuable goods, keeping in mind that the limited wealth of our customers poses an impressive challenge to our operations, one that other for-profit companies might not face.  The key, however, is to use this challenge to become radically more cost-effective than we would be if we operated as a non-profit.

Nevertheless, asking customers to swap batteries in Chanika would eventually constrain EGG’s reach.  I have therefore been tasked with figuring out how to get EGG’s batteries closer to current and potential customers.  We considered the idea of opening EGG storefronts near places like Bwama but quickly decided that the capital and labor costs would be too high.  We are now looking into franchising the transport and swapping of EGG batteries.  Our franchisees will ideally be storeowners that have physical space near our customers (e.g. convenience stores, cell phone shops).  These storeowners will take care of transporting batteries to and from Chanika (and other charging stations as they open up) and will swap batteries at their storefronts for a fixed price.  The price will be set to allow storeowners to profit from each battery swapped (even after transportation costs).

I began conducting interviews with potential franchisees last week, and my initial impressions are positive.

• The storeowners we spoke to are intelligent and business-savvy.  During our conversation, Salwa Sultan, who sells building materials in Msanga and recently became an EGG customer, quickly calculated what the swapping price at his storefront would have to be in order for him to profit from each swap.
• They have information about local distribution channels that is not immediately apparent to outsiders.  Phares Kweke, who owns several shops in the Mvuti area and has been an EGG customer for five months, surprised us by explaining that his goods travel from Mbgata to Chanika, instead of in the opposite direction as we had assumed.  Many of the storeowners we spoke to know who in their village travels for business, where they travel to and how often.
• Finally, they have some degree of accountability to the people in their villages.  All of the villages we visited have a central street or intersection where stores are located, and the villagers seem to know the storeowners in the area and vice versa.  We hope that these ties will prevent franchisees from taking advantage of customers, but we will also make sure to weave proper incentives and quality controls into our franchise offering.

Over the next few weeks, I will continue speaking with storeowners and will begin developing our franchise offering.  I am excited to be involved in making EGG’s service more accessible to current and future customers.

*****

A graduate from Rice University and a consultant at Booz & Company, Pareen Bathia will be assisting EGG-energy’s management team in Tanzania this summer.  If you are interested in applying for such a fellowship, please let us know at info-at-egg-energy.com.  Please note that all summer 2010 positions have been filled.

Isn’t it ironic that some of the most important areas for investments in sustainable, balanced and long-term development, namely Africa and clean energy, are so heavily impacted by the current economic downturn? It certainly makes sense for investors, companies and consumers to focus on their investment base, reduce their risks and consolidate to do better in the future.  At the same time, isn’t it the best time to support the potential products, ideas and startups that can make a difference in the global warming mitigation and sustainable growth race?

—

2009 was a tough year and the situation looked scary.  Stock markets were down – see the Dow Jones’ 50% drop in two years -, banks such as Lehman Brothers were going bankrupt and unemployment reached 20% in such places as Spain.  It therefore made sense for consumers, companies and investors to reduce their spending and appetite for risky investments.

One of the sectors which suffered the most was clean energy.  A look at the fluctuations of the Wilderhill New Energy Global Innovation Index highlighted in an article from the Economist (The Green Slump, http://www.economist.com/specialreports/displaystory.cfm?story_id=14994802) shows that clean energy was hit almost twice as hard as the S&P 500, losing 43% of its value between 2007 an 2009 when the S&P 500 was only losing 24%.  In 2009 alone, clean-tech companies saw a 50% drop in investments from the previous year, although fortunately the number of deals increased (U.S. clean-tech investment falls 45% in fourth quarter, http://latimesblogs.latimes.com/technology/2010/02/us-cleantech-investment-falls-45-in-fourth-quarter.html).

This is alarming as clean energy is one of the most critical areas for investments, not only for financial returns but also and above all as the fuel to the engine of global warming mitigation.

Why are clean energy investments suffering so much?  Some of the key reasons put forward in the Economist (The Green Slump, http://www.economist.com/specialreports/displaystory.cfm?story_id=14994802) include high up-front costs. This means debt finance funding and high debt-to-equity ratios, which explains why, when the financial crisis made money less available, the clean energy sector was among the first to suffer.  Others argue that the lack of support from consumers triggered fear from investors.  Lack of support from consumers?  Well yes, in critical times, consumers tend to flow towards whatever cost effective solutions they can find.  And the relative failure of the Copenhagen meeting in 2009 did not help incentivize consumers to favor more eco-friendly solutions.

It remains to be seen what impact this will have on global warming.  Clean energy investments must grow to reduce our environmental impact and limit temperature rises.  But by how much?  Different views have been voiced.  A study by New Energy Finance and the World Economic Forum shows, for instance that they should reach $600 billion yearly by 2030, from a little more than $100 billion in 2009 (Green Investing: Towards a Clean Energy Infrastructure, 2009, http://www.weforum.org/pdf/climate/Green.pdf).  This would imply a five-fold increase in 20 years, which will not be easy.  We were already late when signing the Kyoto protocol in 1997, we are still very much behind this target today.

At the same time, the financial crisis has also had a significant impact on Africa.  The BBC estimates from $49 to $280 billion the losses for 2009 alone (Crisis will cost Africa $49bn,  http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7945843.stm).  This is bad news for a continent that needs to catch up on development and accelerate its growth.  What’s more, the impact of a $ 280 billion drop in investments on poverty and development is likely much worse in Africa than on other continents.  Programmes for health, education, nutrition and infrastructure were reduced or stopped.  And some are wondering if Africa will ever meet its Millennium Development Goals.

People, here is a gap to fill.  To catch up, we need to find solutions that are innovative, affordable and efficient.  This is what we have been trying to develop at EGG-energy: an innovative supply chain, an affordable project for investment and an efficient idea using existing products, channels and means to reach consumers and reduce their kerosene/carbon footprint as quickly as possible.  Luckily enough, EGG-energy is only one of many ideas that are out there to help the world be a better place: good luck to them all!

Emmanuel Cassimatis

The fact that the light switch was there, and that flipping it would illuminate the room, had always been blindingly obvious to me. What does one do when the sun begins to set and it becomes too dark to continue reading? What does one do when entering an unfamiliar area, perhaps the basement, or the garage? “Well, duh,” my smart-aleck younger self might had replied. “You figure out where the light switch is!”

However, for almost a quarter of the Earth’s population, that light switch doesn’t exist. According to a WHO/UNDP report released November 2009, there are one and a half billion people in the world today who lack access to electricity. The problem is worst in Sub-Saharan Africa, EGG-energy’s home turf. In Sub-Saharan Africa, 74% of people don’t have access to electricity, and in Tanzania, the figure comes in at a shocking 89%. As we can see from Map 1, over 80% of those without electricity worldwide reside in Sub-Saharan Africa or in South Asia.

But the problem doesn’t stop there. Research shows that households without access to modern energy sources (such as electricity) often turn to solid fuels (coal or traditional biomass, such as wood, dung, or charcoal). Indoor air pollution caused by the smoke from solid fuel use has been linked to almost two million deaths per year worldwide from child pneumonia, chronic obstructive pulmonary disease (COPD), and lung cancer. A remarkable 99% of these deaths are occurring in developing countries, suggesting that these deaths are highly preventable.

Important an issue as energy is here in the developed nations, regularly bandied about in the halls of our capitals, how much more important must it be in the developing nations that don’t enjoy our indulgent level of access! The fact of the matter is, energy is a challenge for all of us, because it touches upon so many inescapable aspects of our well-being, from quality of education to quality of medical care, from economic impact to ecological impact.

Developing countries, especially, cannot hope to achieve the national energy access targets they have set (and in particular, those Millennium Development Goals set for six years from now) without a significant increase in efforts to make modern energy sources available to their citizens, efforts that EGG-energy is very much a part of. Working together, we can and we will start switching on the lights for those 1.5 billion people still living in the dark, and help them begin to vanquish the monsters that they face in their own lives every day.

-Mark

William came to campus on Wednesday, the last stop on a long tour that took him and co-author Bryan Mealer across the country several times to promote their new book, “The Boy who Harnessed the Wind.” They talked about William’s remarkable achievement, and the events that led up to it. William’s family was one of maize farmers, and in 2001, there was a terrible famine that swept across Malawi. Faced with a terrible shortage of food, they were forced to cut back to one meal per day, and William was forced to drop out of school. Not wanting to be behind when he was able to rejoin school, William began spending a lot of time at the library, reading up on anything he could get his hands on. One of the books at the library was a British physics textbook, which talked about wind energy, and how it could be harnessed to pump water. Being able to pump water would mean that William’s family would be able to irrigate their fields, which would mean that they could harvest up to three times throughout the year, and not have to go hungry. Inspired, William decided to build a windmill for himself. He didn’t have any materials, and so he went to the local junkyard and picked out a melange of discarded parts from tractors, automobiles, bicycles, and pipes. His neighbors, and even his own parents, thought he was going crazy, but he kept on going, determined to show them that if somewhere, someone had constructed one of these before, then he could do it too, and use that power to help his friends and family. After finally getting it to work to the point where it could illuminate light bulbs, power radios, and charge cell phones, he became something of a local celebrity, with people coming from all over to him to see his strange contraption and to charge their cell phones. In 2007, he was invited to speak at the TEDGlobal Conference in neighboring Tanzania, where he took a plane for the first time, stayed in a hotel room for the first time, and, for the first time, told his story onstage to an the rest of the world. He now attends school at the prestigious African Leadership Academy in South Africa.

President Obama arrived on campus on Friday amid much hullabaloo, with people lining Massachusetts Ave for hours before his scheduled appearance holding signs with pictures of wind turbines and slogans such as “Clean energy NOW.” In his speech, he talked about the commitment that America has always had to new technology and the advancement of new ideas, calling us “heirs to a legacy of innovation.” He made reference to the Morrill Land-Grant Colleges Act signed into law by President Lincoln during the Civil War and the G.I. Bill signed into law by President Roosevelt during World War II, both of which had a great impact on economic recovery, while at the same time encouraging innovation and discovery by making education more accessible. However, he acknowledged, some of the challenges that we face today are more complex and more interconnected than those in the past: “The system of energy that powers our economy also undermines our security and endangers our planet.” There is “no question,” he said, that something has to be done about harnessing renewable fuels, creating new clean energy technologies, and preventing the consequences of climate change. “Countries on every corner of this earth now recognize that energy supplies are growing scarcer, energy demands are growing larger, and rising energy use imperils the planet we will leave to future generations.” He then went on to talk about his commitment to meeting these challenges: “The world is now engaged in a peaceful competition to determine the technologies that will power the 21st century . . . The nation that wins this competition will be the nation that leads the global economy. I am convinced of that. And I want America to be that nation.” He talked about the American Recovery and Reinvestment Act of 2009, which represented “the largest single boost to scientific research in history.” Going forward, he said, “we have always sought out new frontiers, and this generation is no different. These frontiers cannot be found on a map; they are being explored in our classrooms, our laboratories, our startups, and our factories . . . This is the nation that has led the world for two centuries in the pursuit of discovery. This is the nation that will lead the clean energy economy of tomorrow.”

While these two visitors came from starkly different backgrounds—one representing a village no one has heard of in rural Malawi, and the other representing the highest office in the most powerful country in the world—it was startling to see how much their interests and their messages aligned. I believe this goes to show how energy truly is a global challenge, one that affects people everywhere, no matter where you live, no matter how old you are, no matter what your social or economic backgrounds are. Listening to these two speeches, I think a common theme that becomes apparent: looking ahead, it is through clever innovation and new ideas that we will solve the world’s energy needs, no matter if that innovation occurs in the state-of-the-art wind testing facility being built in Boston, or atop a windmill made of scrapped parts lashed together in sub-Saharan Africa. The fact of the matter is, there is an energy problem today, and it is up to us to do what we can to fix it for the generation of tomorrow.

—Mark

1987, 1997 and 2007 were all remarkable years for green, cleantech, carbon cap and trade, global climate change and Kyoto to become respectable household words.
1987: birth of sustainable development as a concept (Brundtland Commission‘s Report)
1997: commitment by industrialized nations (minus the USA) to lower their greenhouse gas emissions (Kyoto Protocol)
2007: formal acknowledgment by the international community that anthropogenic emissions of greenhouse gases cause climate change (IPCC’s 4th assessment report).

It took more than 30 years to make the case for businesses to plan their long term growth in a carbon-constrained economy so clear that the oldest consulting firm in the world, Arthur D. Little, recently cautioned against not doing so. Yet, “carbon” (and all the environmental externalities that it has come to represent – remember acid rains, mercury contamination, dead rivers and chemical dumps?) is only one of the three sustainable development stool’s legs. The economic crisis that unfolded in 2008 brought the “economic leg” on the front scene, but what shall we do about the “social” one?

source: http://www.ac-nancy-metz.fr/enseign/anglais/Henry/Sustainable.png

Although its three legs could be fixed separately, it is very unlikely that this would be the most efficient algorithm for our stool to remain stable, so interconnected are the problems and situations that challenge its balance. The Global Environmental Outlook published by the United Nations Environmental Program in 2007 stated it as clearly as can be, when, after highlighting the fact that fisheries are in dire straits (the laps of today’s commercial fisheries may collapse in less than 40 years), species become extinct 50 times faster than before the industrial revolution (despite efficient conservation efforts) and our average environmental footprint is 30% larger than that which the Earth can sustain, it observed that the current energy, environment and development global crises are all but one same challenge for our civilization.

Will it take another thirty years for private actors and businesses to realize that there is more to looking towards the South than a moral imperative, and that they have a lot to win when sustainably contributing to unleashing the creative forces of the developing world? After all, the strong brick house was not the easiest one to build. It simply was the only one to withstand the wolf’s blowing attempts.

- Blandine