More from: solar energy

Sogexpress’ Consignment Model Innovates in Inventory Supplier Financing for Solar Street Agents in Haiti

Haiti is the poorest country in the Western hemisphere and has some of the lowest levels of electrification in the world. To address this massive shortfall in access to quality and reliable energy, Haitian Money Transfer company Sogexpress, has made a commitment to radically increase access to clean energy products.

Read

The vehicle Sogexpress has chosen to achieve this goal is through its agent network, especially its street agents. To test the initial viability of this approach Sogexpress introduced a pilot to encourage 340 of its 1,000 street agents to sell solar lanterns. Sales were strong, but the test demonstrated a need for a source of supplier credit to finance the inventory the agents planned to sell.

Market research conducted by Arc Finance in 2014 indicated that the consignment model was the best financial mechanism for this pilot: as it lowers risk for the agents and Sogexpress as compared to a more formal loan product. Sogexpress was not prepared to bear the risk of handing over large amounts of inventory without some sort of guarantee, and the agents were uncomfortable borrowing money to purchase inventory for new, unfamiliar products and carry the risk until those products were sold.

So Sogexpress, with the assistance of Arc Finance, the IDB’s Multilateral Investment Fund and United States Agency for International Development (USAID), spent several months developing the consignment mechanisms, structure and policies. It also upgraded and adapted the Sogexpress IT and Management Information Systems to ensure they were fit for the purpose of tracking the credit and status of agents.

Towards the end of 2015, Sogexpress started implementation of its retail consignment program. The agents or shop retailers don’t have to purchase the products they sell. Instead, the company lends them its products on “consignment”, which allows Sogexpress to increase the working capital of its street retailers, diversify its portfolio, and expand its business and increase revenues.

A background check and selection process involving several steps mitigates the risk of lending. Firstly, Sogexpress’ démarcheurs (trusted senior agents) identify prospective street agents and recruit them. Next, store managers create and evaluate files on each potential agent. The store manager interviews selected candidates. The store manager registers the approved agents, and sends their files to the selection Committee. Once the Committee approves an agent’s application, the street agent signs a consent form. This form describes the agent’s commitment, duties and responsibilities in detail.

The new agent pays a 300 HTG (approximately US$5) deposit to a Sogexpress store manager to be enrolled in the consignment “Loyalty Program” and receives a special “loyalty card” as identification of membership. This program has various objectives, including: to track sales data and agents’ performance; to allow agents to accumulate loyalty points; and to track consignment portfolio quality, with an alert system in place to flag delinquencies or other problems.

After agents are registered, they are given a credit limit of 3,000 HTG (US$50), with which they can borrow energy products from the company (the value of approximately three solar products). Later, once the agent has demonstrated creditworthiness, he or she may receive a limit of up to 50,000 HTG (about US$900). Each new agent is given a kit that includes different models of solar lamps with a maximum value of 3,000 HTG (US$50), a branded backpack in which to carry the lamps, and flyers with descriptions of the products.

In order to support its new agents, Sogexpress provides marketing support through sound trucks and advertising. Training sessions based around product details and selling tactics further bolster the agents’ capacity to effectively engage with prospective customers.

As of August 31st 2016, Sogexpress has enrolled 561 agents in this program. In the summer of 2016, Sogexpress and Arc Finance conducted a first review of the pilot, collecting feedback and data to make the consignment process faster and easier. As the company moves forward, it is aiming to increase its efforts to retain active agents. Arc is helping Sogexpress to grow this program, and to reach its target of enrolling 1,000 agents by the end of the year – especially outside Port-au-Prince where the competition among energy companies is less intense. It is also in these rural areas where people are in the most need of reliable and safe lighting solutions, such as the solar lights for which this model is so well suited.

Dominique Policard, Executive Commercial Director at Sogexpress, foresees that:“This program has not only the advantage of facilitating access to clean energy but also of helping the street agents access financial services. Sogexpress is very proud of this new program and hopes to scale it in the future.”



SunFunder Announces Closing of US$2.5 Million Funding Round with Schneider Electric – Both Investors in Arc Partner Organizations

Solar finance startup SunFunder, an investor in Arc Finance partner SolarNow based in Uganda, has closed a US$2.5 million Series A funding round, a milestone for investment in off-grid, small-scale solar. Alongside support from Khosla Impact and Better Ventures, SunFunder secured funding from Schneider Electric, a major multinational player in energy products and key investor in Arc partner Simpa Networks, which manufacturers and distributes solar home systems with a proprietary metering system in Uttar Pradhesh, India.

Read

Schneider’s involvement is a boon for SunFunder in particular and for small-scale energy finance in general. The role that both have played in working with Arc Finance partners makes this deal something Arc Finance is proud to highlight.

Based in San Francisco and Tanzania, SunFunder provides short-term working capital and project finance loans for solar home systems, microgrids and commercial solar projects in emerging markets. The company raises debt capital through the Solar Empowerment Fund, offering accredited investors a risk-reduced, fixed-income investment opportunity in diverse portfolios of high-impact solar loans across multiple countries and solar technologies. The company is creating a solar finance ecosystem that aims to catalyze billions in financing for solar beyond the grid.

Schneider’s partnership in this venture is a true watershed. An energy giant that has operations in 100 countries and annual sales of US$30 billion in 2013, Schneider has products ranging from circuit breakers to power plants, distributed solar products to AC and DC microgrids. Its involvement is a sign that small-scale solar is moving beyond a niche market and into a mainstream, global one. For Schneider, financing will unlock working capital in order to finance distribution of its wide range of products. Schneider is working on launching its new US$80 million energy access fund with bilateral agencies like the U.K.’s DFID and the EU’s EIB to help unlock capital.

SunFunder, which has provided US$425,000 to Ugandan Arc partner SolarNow (an Arc case study of which can be found HERE) plans to raise and deploy US$100 million in the next three years into solar projects around the world and to expand its capacity in local markets, starting with East Africa. The IEA estimates that the world requires US$44 billion of investment to expand electricity infrastructure to achieve universal energy access by 2030. Of that US$44 billion, it is estimated that US$26 billion will be put towards toward decentralized systems that have been largely powered by renewable energy, according to SunFunder.

SunFunder’s platform for attracting capital to the small-scale, off-grid sector includes the Solar Empowerment Fund (SEF) – a debt facility that issues Solar Notes to accredited and institutional investors, offering a rare opportunity to invest in a diversified, vetted, and high-impact portfolio of off-grid and grid-deficit solar projects with an attractive risk/return profile. In Sept 2013, SunFunder closed its first issuance of Solar Notes, raising US$250,000 from four investors.

In addition, SunFunder is continuing to fundraise from accredited and institutional investors and from its crowdfunding platform, in which non-accredited investors anywhere can invest as little as US$10 in any of the projects listed on SunFunder.com (and is profiled in an Arc Finance briefing note on Crowdfunding, available HERE).

Once a project is fully funded, SunFunder facilitates low-cost financing to the solar partner to fund its implementation. As projects get repaid, investors earn their investment back (without interest, due to current regulatory limitations), which they can invest again or withdraw. SunFunder’s solar partners pay a modest interest rate on the financing that they receive, which is passed back to SunFunder’s investors as Impact Points, which can be reinvested into other projects. See Arc’s Briefing Note on Crowdfunding for a more detailed explanation of how this works.

Ryan Levinson, CEO of SunFunder, shares Arc’s view that access to reliable finance is the main barrier preventing solar energy providers from reaching scale and leapfrogging the grid in target markets. “In the last two years, SunFunder has established a solid track record and proven that the market is economically viable. This investment round will allow us to expand our capacity in local markets and substantially grow our loan portfolio,” he says. For more on Ryan’s thoughts, see Arc’s YouTube channel for a panel discussion video at Arc’s Innovations in Finance conference.

So far, SunFunder has financed more than US$1.7 million for solar projects, with 15 solar companies in six countries, and maintains a zero percent default rate, helping over 140,000 off-grid people in developing countries access affordable solar energy.

At Arc Finance, we’re proud to see SunFunder and Schneider, funders of two key Arc partner organizations, pass this key milestone. As this important and young sector attracts mainstream financing, it demonstrates to new investors that investing in renewable energy for off-grid customers is a sustainable commercial venture – and here to stay.


Solar Microgrids in Odisha: Arc Partner Mahashakti Foundation Electrifying Off-Grid Villages

Mahashakti Foundation (MSF) is one of Arc Finance’s partner organizations under the Renewable Energy Microfinance and Microenterprise Program (REMMP) funded by USAID. An NGO-MFI based in the Indian state of Odisha, MSF has, with Arc’s support, provided loans for efficient cookstoves and solar portable lighting under REMMP. In recent months, MSF has taken on a more ambitious program: connecting rural, off-grid villages to solar microgrids. Durmusi and Totaguda are two examples of how a partnership between the financial institution, investors, developers and the villages can connect households to reliable, clean and affordable lighting – providing significant and positive economic, social and environmental impact to these communities.

Read

Durmusi village is situated in the Gopinathpur Gram Panchayat of Thuamul Rampur block of the Kalahandi district in Odisha. A largely tribal block, Thuamul Rampur is the poorest block in the district and lacks even the basic infrastructure of roads, water, communication and electricity. Illiteracy rates are high – 95% for men and 97% for women. Socio-economic and gender disparity rates are also among the highest in the country. Durmusi consists of 47 households, with 230 people. Most are small-scale farmers, people scavenging in the forest for produce to sell, and some daily wage workers. MSF is one of the few financial institutions or NGOs working in what is one of the least developed parts of India.

After promising results with sales on credit of efficient cookstoves and small-scale portable solar lighting, MSF with Arc’s support conducted a needs assessment of the area, concluding there was scope for installation of a solar microgrid. TERI New Delhi and Utkal Alumina Kashipnded supported the installation, and the microgrid is now operating in the center of Durmusi, with solar modular units allowing generation capacity to scale up easily to meet demand.

Demand has been considerable. Out of 47 households, 40 are connected through fixed wiring with two LED lights per house. Operation and maintenance costs are only INR 30 (USD $0.50) per month per household. Power is generated during the day, charging four battery banks, and consumed during the night. The whole system is controlled by a main switch, installed in one household – that of a designated Village Level Entrepreneur (VLE). The two LED lights were selected to provide superior lighting quality to kerosene – the previously dominant lighting source. A Users’ Committee has been formed, involving all active households, and a President and Secretary appointed to ensure smooth management of the grid.

When the grid was installed, the villagers requested that one grid node be used for a street light in the center of the village, which is the social focal point of Durmusi. This allowed villagers to meet in the evenings, and will enable them to celebrate local festivals all year round. As Sri Bagi Majhi, one of the village leaders, says: “The light brings our village together now.”

Totaguda is close to the block headquarter Kolanara, in Odisha’s Rayagada district, and includes 33 households with around 150 people. The Government of Odisha has launched a program called Biju Grama Jyoti, with the objective of supplying grid electricity to each household. However, Totaguda’s remoteness means there is no grid connection at all. Like the villagers in Durmusi, most residents depend upon income from agro-forestry, or have small plots of land, and rely on rainwater for irrigation. Infrastructure is virtually non-existent. There is no school, health center, nursing or veterinary facilities in the village. Totaguda villagers are entirely dependent on the villages of Khamasing and Kolnora for any medical, educational or other support. The only infrastructure or services of any kind is, again, MSF.

Totaguda was therefore a clear choice for a microgrid pilot project, because of the immense impact that regular, clean and inexpensive electricity would have on its residents. It was during a village borrowers’ meeting that one of MSF’s solar sales officers identified the issue of grid inaccessibility in the region, and raised the issue of switching Totaguda to a microgrid. Interest and enthusiasm only continued to increase after educational sessions informed the residents of the benefits and responsibilities involved.

After a needs assessment study by MSF, TERI New Delhi supported MSF with a CSR fund of from SBI in Mumbai. Out of 33 households, 32 are now connected to the microgrid, which is similar in design and capacity to the slightly larger one in Durmusi. As in Durmusi, there is a Villagers’ Committee, with a President and Secretary. A joint savings bank account has been opened in Mahashakti Primary cooperative in Rayagada in the name of the President and Secretary. The usage fees, (again, INR 30/month per household) are tied to previous monthly expenditure on kerosene.

Besides the intangible community benefits of having lighting at night, several villagers have expressed plans to use the after-dark lighting for income-generating activities, extending their potential working hours, as well as encouraging children who are in school to do homework after dark.

Roji Madangi, 29, is a typical Totagudan. As darkness falls, she scampers to wind up her daily evening chores. Like most other women in her village, she heads to her kitchen to prepare dinner long before dinnertime, because preparation and cleaning under the light of kerosene is almost impossible. Roji’s husband is a farmer and the sole breadwinner for the family, earning about INR 3,500 (US$56) per month, which isn’t enough to provide even two meals per day for everyone in the family. This is a typical story, but one which has dramatically changed since the installation of the microgrid. The microgrid lights the village for more than seven hours per night, meaning villagers can prepare food and eat after dark, spend less on kerosene, and work longer productive hours. At night, the women are now able to earn income for the household by stitching sal leaves together to form Kholi, a plate made out of leaves. Roji herself now earns more than INR 2,000 (US$33) per month – adding half again to her husband’s monthly household earnings.

“Before, we could not even imagine this freedom in our families,” she tells the Arc team. “Our rice production was barely enough to support us, yet now I feel more empowered because I contribute to the household by not only making food for us, but by earning too.” Roji adds, “I make 100 to 150 Kholi each day, which we sell at one rupee each, and we get enough money from our hard work to afford both plenty of food and to save.”

A village ward member, Sri Naria Mandangi, says that she has been encouraging her neighbors to start new income-generating activities and make use of the additional productive hours at night. With access to modern electricity, each household in this small settlement will have an inspirational story to share. At Arc Finance, we’re proud to see the results that our partner organization MSF is achieving, and look forward to sharing more of these stories in the months and years to come.


SunFunder Announces Closing of US$2.5 Million Funding Round with Schneider Electric – Both Have Invested in Arc Partner Organizations

€2 million equity investment lays groundwork for scaling renewable energy asset finance and distribution in East Africa

SolarNow, the Uganda-based solar asset finance company, has closed its most recent equity round, raising €2 million from Novastar Ventures and Acumen, to help meet massive demand for high-quality solar technology in East Africa.

Read

Providing a range of modular 50-500 Watt solar home systems and DC appliances through a franchise model to mainly rural customers in Uganda, this investment will enable SolarNow to expand its branch network, further upgrade its Management Information System (MIS), and invest in R&D.

Willem Nolens, CEO of SolarNow, says that with this investment, SolarNow will focus on fulfilling the growing demands of its existing clients, expand to under-served areas of the country, and prepare for expansion into other East African markets in the medium term.

“Our business has high working capital demands. The more we sell the more money we need. We are buying the best components and selling them to low-income customers, with just a 20 percent deposit payment. However, this does mean a company like ours needs a steady and ready supply of capital, both to finance the systems before installments are complete, but of course also to plan for future expansion. Equity can stimulate further debt capital, and so this equity investment by two partners who share our vision, is so welcome. It will allow us to do what we are doing, better, and to do it with many more people.”

“We see Novastar Ventures and Acumen’s support as a great acknowledgment of our business model, and a shared assessment of the future plans we have. We’re not just a solar product company or a pay-as-you-go service provider; we are an asset finance and distribution company with a focus on renewable energy. Bringing together affordability and distribution with great products is what justifies this trust,” Nolens concludes.

Mauritius-based Novastar Ventures and US-based Acumen have invested €2,000,000, based on what they believe to be a great opportunity for scale into the region and product diversification.

Andrew Carruthers of Novastar Ventures said: “We are impressed by SolarNow’s well-developed distribution network as well as the quality of equipment and service they provide. They raise the bar for low-income customers in terms of affordability, reliability and service guarantees. We look forward to working with them to scale rapidly into this poorly served market.”

Duncan Onyango, East Africa Director at Acumen said: “We are excited about our investment in SolarNow, a company whose solar products clearly improve the lives of rural households in Uganda.”

A recent update has been published to a 2012 Case Study written by Arc Finance, which is supporting SolarNow under the USAID-funded Renewable Energy Microfinance and Microenterprise Program (REMMP). This case study update, which provides more information on SolarNow’s business model and strategy, can be found at Arc Knowledge.


Financing Small Scale Off-Grid Clean Energy: Opportunities and Challenges for Arc’s REMMP Partners in India

Arc’s REMMP India Partners meet for a full day of strategy building and knowledge sharing in Delhi

Financing Small Scale Off-Grid Clean Energy: Opportunities and Challenges for Arc’s Partners, a workshop in Delhi, India organized by Arc Finance in conjunction with USAID, brought together microfinance institutions (MFIs), energy enterprises, a crowdfunding platform, and an MFI apex funder for a day-long strategy session.

Read

How can MFIs best work with energy companies to bring renewable energy (and finance for it) to remote communities? How can these organizations make sense of the growing market of renewable energy products available? How can the sector access the long-term, low-cost debt required to reach scale in a working capital-intensive industry? And how can Arc Finance continue to help its partner organizations and other institutional friends to move from idea to business model to pilot to scale? These were among the questions discussed in a workshop round-table format with twenty CEOs and managers from Arc’s REMMP partner organizations in India (representing almost a dozen organizations across several states in India) and the Arc Finance team.

Funding challenges and opportunities were arguably the key issue of the day, with Arc partners FWWB and Milaap.org leading the discussion about the challenges of accessing low-cost and longer-term debt finance. Over the past several months, Arc Finance has been undertaking stakeholder research on debt finance needs by MFIs specifically for energy lending. The findings show strong demand and interest for an energy specific debt facility for MFIs, and this was reinforced by Arc’s partners at the Delhi Meeting. All present agreed that the market is ready for innovative new financing initiatives to scale the sector.

Results-driven business model experimentation was also a particular theme of the day. The partners discussed their experiences and lessons-learned from experimenting with different business models. The willingness to experiment and adapt when things aren’t working is a characteristic of successful organizations in any sector; energy finance is no different, as Utkarsh, WSDS, Mahashakti Foundation and Grameen Koota demonstrated when sharing their experiences.

The partners then took a deeper look at different sales models, which are central to any organization’s energy finance business model. Should an organization retain mobile agents such as Village Level Entrepreneurs (VLEs) to carry and demonstrate products to potential customers? If so, should the VLE’s offer informal credit to customers who cannot afford to buy in cash? How does the institution get the products into the hands of agents – through micro-consignment, for example? With whom lies the responsibility for timely after sales service in the case of a defective product?

Several of Arc’s partners in India and other countries are exploring these options, identifying and adapting the right model for energy lending. DCBS (a small MFI in West Bengal) and Simpa Networks (a developer of proprietary metering technology for solar home systems which now uses a direct sales model) have both shown innovations in sales models – particular through agents. And while anecdotes are not evidence, sometimes one deserves a moment’s spotlight: the son of a DCBS client who received a loan for a solar lantern recently placed 44th out of more than a million candidates nationwide in tertiary entrance exams, something he attributes in large part to being able to study in the evenings thanks to his solar lamp.

How to transition from “push” products (supply-led) to “pull” products (demand-driven) was a dominant theme as well. The primary market barrier for energy products is lack of trust – particularly when government initiatives in the past have introduced poor quality products, hindering their reputation and making energy programs all the more difficult down the track. But as so many stakeholders know, energy clients very often become repeat energy clients – who increasingly “pull” new products as their trust and energy needs and appetites grow.

The final session of the day was interactive and more open. The participants were asked to articulate their visions and dreams for the small-scale renewable energy finance sector in the years to come. Beyond sales targets, what do they want the future to look like? Arc’s wide range of partner organizations had various aspirations, from product expansion to unlocking new sources of financing. But one common thread was the recognition that this sector is not just about providing lighting to off-grid communities. Rather, it’s about understanding and supporting the so-called “energy ladder,” or “escalator.” Partners are committed to providing broad solutions to help clients climb this ladder while increasing household economic productivity along the way.

The willingness of Arc’s partners to share information so freely is clear evidence that they see themselves all heading in the same direction and that ending “energy poverty” is a shared goal. This partners’ meeting built upon an Arc-workshop held in Manila last October in conjunction with the Microcredit Summit, and there is strong enthusiasm for this group to morph into a de facto network. Arc Finance provides a range of services to stakeholders, from Technical Assistance (which includes product identification, marketing, human resources, business model and sales support) to loan guarantees, catalytic grant funding and training. But core to its mission is being a “conduit” of sorts, a hub to develop new partnerships in small-scale energy finance. To this end, this partners’ meeting in Delhi was an exciting platform that Arc Finance was proud to organize, and from which the Indian sector can continue to grow.


The 2014 Ashden International Award Winners: Bringing Clean Energy Access and Finance to Billions through Innovation and Vision

The Ashden Conference and Awards gives organizations in the renewable energy space a chance to showcase and share innovations in sustainability with practitioners, investors, academics and the press. As in previous summers, Arc Finance participated in this year’s conference, alongside current and potential partners working on ways to bring affordable, clean energy to the BoP. The 2014 Ashden International Award finalists were winners in five categories: Financial Innovation; Avoided Deforestation; Clean Energy for Women and Girls; Energy for Agriculture; and Sustainable Buildings. Each of the winning organizations is working on a solution to the problems that are part of Arc Finance’s core mission, which includes helping scale the clean energy finance sector by shining a light on enterprises that are leading the way through innovation.

Read

Infosys wins the Sustainable Buildings Award

One of India’s largest IT companies, with campuses at ten locations across the country and offices around the world, Infosys has been designing new, low-energy buildings and retrofitting existing buildings with the technology applied in new construction – decreasing electricity consumption per staff member by 44% across its Indian business campuses in the last five years.

Infosys has realized annual savings of US$200 per employee, and 39 percent of the company’s electricity is now generated or purchased from renewable sources. GHG emissions have been cut by 57 percent (or 210,000 tons per year), three quarters of which is from efficiency measures alone.

For true sustainability, improved efficiency has to make a “single bottom line” case – it can’t be just for environmental and social reasons. To this end, Infosys invested with the goal that the cost of retrofits would be paid back in energy savings within three years.

The company seizes every opportunity to reduce energy consumption, from reducing the size of chiller plants for air conditioning, to painting roofs white to reflect the heat. Cutting-edge design for new buildings also helps keep offices cooler and maximizes natural light. With US$80 million cut from its energy bills and targets of halving electricity use per employee and all electricity coming from renewables by 2018, Infosys has made the bottom-line case for large companies to invest in energy efficiency.

The Financial Innovation Award goes to Off.Grid:Electric

Off.Grid:Electric is a Tanzanian company that has emerged as a leader in the field of using mobile money to sell affordable pay-as-you-go solar power – of particular interest to Arc Finance, which works with different partners with various approaches to the affordability challenges of solar.

East Africa – countries like Kenya, Tanzania and Uganda (where Arc’s partner SolarNow is based, and is using a hire-purchase credit facility to provide a different affordability mechanism) – is an exciting “petri dish” of experiments in clean energy innovation. Mobile Money, through M-PESA, first reached scale in Kenya, and the model is now being replicated across several sub-Saharan countries. Leveraging mobile money infrastructure to allow poor customers to pay for clean energy in regular, small amounts is an opportunity that Off.Grid:Electric (among others) is capitalizing upon.

Off.Grid:Electric considers itself a service, more than a solar, company. The founders wanted to make solar electricity a mass-market option by focusing on exceptional customer service, including an all-day customer-care telephone line and ongoing support from a local agent. With more than 15,000 homes taking up Off.Grid’s service so far, benefitting 70,000 people, customers are being connected as fast as systems can be manufactured and distributed, thanks in part to a cloud-based customer registration process and product-tracking system app.

Off.Grid:Electric provides an agreed-upon level of electricity service through a five or ten Wp Solar Home System (SHS), including mobile phone charging, which is rented by the customer and installed after payment of a deposit of US$6 or $9. The entry-level model costs roughly US$0.20 per day (the top-end system costs about 63 cents per day) paid over a mobile money platform – with a minimum of one day’s purchase per transaction.

A network of local agents is used to find customers, install systems, and provide ongoing after-sales support. Custom smartphone apps keep customer data, usage, system and payment information integrated and accessible to agents. For the very few customers without a mobile phone, agents can take cash payments.

Crucially, the company prioritizes flexibility of payment for the customer, recognizing the cash-flow limitations typical of poor customers. Service level can be changed, and payment history builds a credit rating for the customer that can be used for other purchases. Off.Grid:Electric currently has about 90 staff – half of which are female – and a network of several hundred local agents. It is financed mainly through equity investment, supplemented by debt and grant funding.

Sustainable Green Fuel Enterprise wins Ashden’s Avoided Deforestation Award

Deforestation and its dire environmental consequences – air pollution, soil erosion and desertification – remain a critical problem in certain countries. Sustainable Green Fuel Enterprise, a Cambodian business turning leftover coconut shells and other bio waste into clean-burning char-briquettes for use as cooking fuel, was the winner of Ashden’s Avoided Deforestation Award.

Most Cambodians cook on wood charcoal, resulting in the world’s worst case of deforestation: the country lost 2.9 million hectares (14 percent of its total land area) in two decades (1990-2010). In addition, the negative health effects of burning wood charcoal, particularly indoors, are well known, and include eye and respiratory disease.

To reduce wood charcoal use, French NGO GERES had already introduced efficient charcoal stoves to the markets, and wanted to expand to tackle charcoal supply as well. In 2009, it partnered with a children’s charity to launch Sustainable Green Fuel Enterprise (SGFE).

Led by Carlo Figa Talamanca, SGFE can scarcely keep up with demand. SGFE produces the char from waste coconut shells (widely discarded and accessible) using low-emission TLUD kilns, and it also buys wood-char from electricity generators. The char is mixed with water and a binder and extruded into briquettes, which are then dried using the waste heat from the kilns.

To date, over 650 tons of char-briquettes have been produced, and production is accelerating. The 47 tons produced in March 2014 alone equals the cooking needs of 1,250 households. Each ton saves ten mature trees, so the equivalent of over 6,500 mature trees have been saved to date. GHG emissions have been cut on the order of 4,500 tons equivalent in 2013, all while introducing a superior product to the market at a cost – 34c/kg – similar to wood charcoal, and cheaper to use due to its reduced waste and uniformity of heating.

A more expensive product – the “diamond briquette,” made from 100 percent coconut shell char – costs double the regular briquette, but its slow and sustained burn has made it particularly popular with food vendors.

Production will double in 2014 thanks to a recent grant from the Global Alliance for Clean Cookstoves (GACC), and further private investment will allow yet another doubling of production, according to SGFE’s team.

Greenway Grameen: winner of the Clean Energy for Women and Girls Award

The Clean Energy for Women and Girls Award was won by Indian cookstoves business 
Greenway Grameen, co-founded by two Indian women two years after completing their MBAs. Greenway’s mission is to provide an affordable, desirable cookstove to improve quality of life for Indian women – who along with their daughters in a male-dominated nation typically bear the lion’s share of household duties, with crippling repercussions on the health and education of the next generation of girls. Despite this, most rural households in India have mobile phones and televisions – so aspiration for consumer goods is alive and well; it’s just a man’s preserve. “The biggest women’s issue in India is men,” argued CEO Neha Juneja, to wide applause.

Collecting and cooking with wood and dung, as hundreds of millions of women are still forced to do, is time-consuming and horrifyingly harmful – indoor air pollution kills more people than diarrhea, malaria and HIV combined – and the majority of victims are women.

To address this, Greenway Grameen’s simple and stylish stoves dramatically reduce kitchen smoke, cook more quickly, and stay cleaner longer. Perhaps most significantly, their design was demand-led from the start; extensive market testing led to an iterative design process focused on women’s needs and aspirations. Marketed as the essential part of a modern kitchen, more than 120,000 stoves have been sold so far, benefitting over 600,000 people in Karnataka, Kerala and Maharashtra states. Two-thirds of the stoves, which retail for US$23, are financed through partnerships with MFIs.

Besides the obvious health benefits of reducing indoor air pollution and the reduction of GHG emissions (over 200,000 tons/year CO2e), considerable time is saved (on average, more than 30 minutes per meal), improving the lives of women and allowing daughters more time to study. But the economic argument is the “clincher”: a stove can pay itself back in 14 weeks through reduced expenditure on wood.

Greenway plans to continue its rapid expansion into other Indian states and then beyond into other markets, as well as introducing a broader range of products.

Proximity Designs wins the Energy for Agriculture Award

Finally, the Energy for Agriculture Award went to a fascinating and inspiring company in Myanmar, Proximity Designs, which is introducingtreadle pumps, solar irrigation systems and other sustainable agriculture technologies to this recently-opened nation for the first time.

For rural farmers, lifting water from wells and carrying it across fields is backbreaking and time-consuming work. Until the 1990s, farmers in Myanmar had no access to energy for irrigation in the 20,000 villages that need 3,000 liters per day per small plot. To address this, Debbie Aung Din and husband Jim Taylor traveled to the country in 2004 to head the national program for international NGO iDE. In 2008, their program to introduce access to energy for irrigation morphed into Proximity Designs. Proximity Designs has introduced foot-operated treadle pumps that draw up water from wells and combined them with water-saving drip irrigation technology. Together, these can dramatically increase agricultural yields and incomes.

The results have been transformative. As of this year, 90,000 treadle pumps are in use in 5,000 villages, benefitting almost half a million people. The pumps were designed and manufactured locally, supporting the burgeoning economy, and two further models were introduced, capable of lifting water to raised storage units. The drip irrigation kits were also locally developed and manufactured, and their introduction allows the cultivation of higher-value crops such as eggplant, which require more water. These products are marketed and sold by a growing network of agents, as well as agro-dealers. Pumps range from $25-38, drip irrigation kits are $38, and tanks $25. Some customers pay cash, but many have availed themselves of the low-cash credit facility Proximity has offered in the absence of a mature microfinance market.

The return on these investments by farmers is considerable – with farm incomes increasing by an average of $250 per year. And Proximity Designs – which the Ashden panel described as “the first to bring energy to agriculture in Myanmar…adapting fast to the needs of the rapidly changing country,” is already working on a solar-powered pump, to be introduced in the near future.

Each of the Ashden International Award finalists addresses key challenges to bringing affordable clean energy to the mass market in poor countries. From leveraging technology such as mobile money, to helping farmers increase their yield, to working towards making tragic indoor air pollution deaths a thing of the past, or demonstrating that a global company with a vision can dramatically cut its energy costs and greenhouse gas emissions with some effort and investment, these companies are true pioneers. Arc Finance is proud to know them, and looks forward to continued partnerships with trailblazers in the sector.


Going “All in” on Solar Finance: How IDCOL Incubates a Growing Industry in Bangladesh

IDCOL and Solar Home Systems in Bangladesh

While demand for small-scale renewable energy is virtually infinite, a small microfinance institution or energy enterprise needs capital to meet that demand with supply. The Infrastructure Development Company Limited (IDCOL) addresses this barrier to scale in a unique and exciting way. With massive infusion of government capital, management from the private sector and a unique asset finance model using creative partnerships, IDCOL has produced a stunningly successful program.

Continue Reading


M-KOPA Solar: Combining Asset Finance with M-Banking to Drive Affordability in Kenya

In sub-Saharan Africa, nearly 590 million people lack access to electricity, including eighty-five per cent of rural populations. M-KOPA Solar is seeking to change this. Based in Kenya, M-KOPA Solar (www.m-kopa.com) is an innovative asset financing company that sells small-scale solar home systems (SHSs) to off-grid households on an affordable, 12-month mobile money payment plan via hire purchase. As of February 2014, M-KOPA actively provided affordable solar power to over 50,000 Kenyan households – and is adding a thousand more households per week. M-KOPA has ambitious plans: it has just raised US$20 million to fund expansion of its customer base from fifty thousand to one million households by 2018.

Continue Reading


Utkarsh Pilot Kicks Off Amidst Great Expectations

Arc/REMMP’s five-branch energy finance pilot program begins in Uttar Pradesh

As one of India’s most successful and dynamic microfinance institutions (MFIs), Utkarsh is one of Arc’s most exciting partner organizations under its USAID-funded Renewable Energy Microfinance and Microenterprise Program (REMMP). The partnership offers a fantastic opportunity to “piggyback” Utkarsh’s nascent energy lending program on top of its underlying vigorous growth. Following a multi-month process, Arc Finance’s pilot program with Utkarsh has just begun renewable energy finance operations in Uttar Pradesh.

Continue Reading


WSDS and Arc Finance: Financing and Disbursing Renewable Energy Technology to Remote Communities in Manipur

The Weaker Section Development Society (WSDS) is one of seven microfinance institutions (MFIs) that Arc Finance currently assists under its USAID-funded Renewable Energy Microfinance and Microenterprise Program (REMMP). A small but fast-growing, community-based MFI, WSDS operates in the central and southern districts of India’s northeastern state of Manipur and has recently begun finance and disbursals of solar home system components to underserved communities.

Continue Reading


Ajaita Shah & Frontier Markets: Building a Renewable Energy Distribution “Ecosystem”

Ajaita Shah is the Co-Founder and Chief Executive Officer of Frontier Markets and the President of Frontier Innovations Foundation. Frontier Markets is a rural marketing, sales, and service distribution company that provides access to affordable and quality consumer durables to low-income households in India. Frontier Markets is currently operating in rural India and working primarily with clean energy products like solar lighting and smokeless stoves. With five years of microfinance experience in India with organizations like SKS Microfinance, and Ujjivan Financial Services, Ajaita has also worked on numerous development projects in seven Indian states.

Continue Reading



Group-based Solar Microleasing in Kenya — a Conversation with Konrad App, CEO of Stima Systems

Stima Systems is a Kenya-based energy startup that delivers affordable lighting and charging services to low-income off-grid customers using a distinct payment model: the group microlease. In this conversation Stima CEO Konrad App shares the origins of Stima’s model and provides insights into the power of groups to expand access and support commercial viability.


Arc Finance at the 2013 Ashden Awards: Partnerships and Innovation in Practice

Solving the “last mile” problem – or providing renewable energy and suitable finance for it to the Bottom of the Pyramid – is far more collaborative than competitive. You can see this clearly in the network of partnerships we at Arc Finance have developed for our current portfolio of projects: we link energy companies, MFIs, technology providers, remittance companies and other distribution organizations to facilitate access to finance for renewable energy for the un(der)electrified billions whose lives can be improved.

Collaboration and partnership were among the key themes of the 2013 Ashden Awards held in London last week. We are proud to be a supporting partner of Ashden and were thrilled to attend the awards, which are among the most prestigious for sustainable energy solutions. Projects awarded ranged from partnerships at the local level (UK-based initiatives such as encouraging cycling or recycling in cities, or developing green spaces) to global projects that try to leverage new technologies, financial innovations and the brightest of ideas in order to scale access to affordable renewable energy to those who need it most: the poor. The conference was a great opportunity to share ideas, contacts and build further partnerships. Collaboration might be a tedious and overused bit of management-speak, but in this space, it is the sine qua non of progress.

Continue Reading


Managing the Success of “The SunnyMoney Way”

SunnyMoney is a social enterprise that was spun off from the NGO, Solar Aid, in 2011. While Solar Aid focuses on installing solar systems into schools across several countries in Africa, SunnyMoney focuses on selling solar lanterns. In just a few years since its launch, SunnyMoney is already reaching sales levels of tens of thousands each month, growing very quickly in Kenya, Tanzania, Malawi and Zambia. The company employs a unique sales and marketing approach called “The SunnyMoney Way,” which works closely with education authorities, incentivizing head teachers in geographically defined regions to promote the benefits of solar lanterns to their students and families. Orders are then collected and the lights delivered in follow-up sales visits by SunnyMoney team members, during which thousands of lights can be sold in a single event.

SunnyMoney’s Managing Director, John Keane, talks to us about the excitement and hard work of the transformation of SunnyMoney from an NGO program into a social enterprise, and now the daily challenge of supporting its growing success.

Continue Reading





An Inside Perspective on Change and Evolution In the Micro Solar Sector: A Conversation with Ned Tozun, d.light Design

Product R&D and design, high volume manufacturing, global distribution, sales and marketing – this is the range of one of the world’s best known micro solar companies, d.light. Since 2006, the company has been developing and distributing high-quality, solar portable lighting products to low-income, off-grid customers worldwide. Ned Tozun, d.light’s President and Co-Founder, recently took some time to speak with Arc Finance about the company’s growth, its approach to distribution and marketing, and the role he sees for microfinance in making improved energy affordable for d.light’s target customers.

Continue Reading