Winrock International Enhancing Capacity of Women Micro-entrepreneurs to Sell Clean Energy Products, Washington D.C. 2016

Niki Armacost, Arc’s Managing Director, attended Winrock International’s Enhancing Capacity of Women Micro-entrepreneurs to Sell Clean Energy Products on November 16, 2016 in Washington DC. At the conference, Niki joined a panel discussion on “Innovations in Supporting Women Entrepreneurs in and Beyond the Energy Sector: Case Studies”, where she highlighted Arc’s work with women entrepreneurs in India, Haiti and Nepal.

The Energy Diaries and What They Mean for Investors: An Arc and MFO Webinar with GIIN

On Friday November 4th, Arc Finance and Microfinance Opportunities presented the findings from the first phase of the Energy Diaries project on webinar hosted and organized by the Global Impact Investing Network, or GIIN.


The ‘Diaries’ have generated huge interest since the research phase of the project finished in late 2015, with the results presented at conferences in Washington DC (to USAID staff), in New York (to a wide range of investors and other stakeholders in the energy finance space), in Delhi (to a large audience of Indian practitioners, investors and policy-makers), and through another webinar back in June, to a global audience.

This time, GIIN invited Arc to present to GIIN’s own investor base, many of whom are involved either in renewable energy or financial inclusion, but few of whom will be involved in the end-user finance of distributed renewable energy products, and the lives of the rural poor who need to access that finance.

How the Rural Poor Buy, Use and Think About Energy was the theme of the presentation, and describes very clearly what the Diaries are about. Developed under USAID’s Renewable Energy Microfinance and Microenterprise Program (REMMP), the Energy Diaries took place across three rural sites in India. It is an adaptation of the now-well trodden Financial Diaries methodology, and involved studying energy usage and spending at the household level to improve understanding of the daily realities of being energy poor; the types of energy sources people choice and why; how energy poverty may impact women and men differently; what gendered needs suggest about optimal energy products and services for this market; and what are the relevant policy implications for stakeholders to better meet the needs of poor households.

Each diarist – most of them women – kept a daily record of all household expenditure, energy transactions (including purchases, sales or gatherings), the usage of different energy sources, and the activities that those energy usages made possible. The daily diaries were supplemented by weekly interviews with trained researchers in the field, and after all data were collected (over 40,000 cleaned data points – a veritable treasure trove of original research), a series of qualitative Focus Group Discussions took place in the field with many of the project’s respondents.

From this emerges an unprecedented – although still incomplete – look at the energy lives of the rural poor, including their use of Distributed Renewable Energy (DRE) products like solar lanterns and home systems.
After an introduction by GIIN’s Allison Spector, Arc Finance Managing Director Niki Armacost walked attendees through the background, remit, methodology, enrollment data on energy expenditure as a percentage of overall household income, the electrification rates and energy sources reported by households, and top level findings of the research, including:

  • That households are developing energy portfolios;
  • That creation of an energy portfolio is driven by household income and expenditures, social/geographical context
and family customs; and
  • That there are clear benefits in providing clean energy, especially increased reliability and larger marginal benefits for women.

Niki then handed over to Guy Stuart, Executive Director of Microfinance Opportunities, Arc’s project partner, to dig a bit deeper into how the data revealed these findings. Guy walked the attendees through some individual household case studies, fuel usage by income segment and age, prevalence of energy usage by source and location, and comparisons of solar versus non-solar households in terms of overall energy access.

As they both put it, the Diaries showed, like the households in the original financial diaries research, the energy lives of the rural poor are sophisticated and complex. Instead of the “ladder” notion of energy – in which households move up in discrete shifts from one traditional fuel source to a cleaner, better and more expensive fuel, families above a minimum income threshold manage an energy portfolio, driven by cost and availability of energy sources/ devices. Families buy, gather and use a range of energy sources for cooking, lighting and mechanical power. They mix and match “traditional” and “modern” energy sources to maximize their utility in a similar way to how they manage their financial portfolio.

But this is driven not only by respondents’ income and expenditures, but also by context, cultural factors and family customs – such as for example the preference among households with older people present for solid fuel like dung and wood for cooking, over cleaner and more modern cooking fuels such as LPG.

In terms of lighting, most households have some basic access to the electricity grid, but they seldom pay for it, and it is almost always unreliable. By contrast, the Diaries and the follow-up focus groups illustrated that while solar has its limitations in what it can power, households with solar lighting value its reliability, versatility and simplicity of use above all.

These attributes are disproportionately felt by women, too – the primary users and beneficiaries of improved lighting, irrespective of who the client of the financing institution is, or who ‘owns’ any product. The Diaries in fact provided welcome support for the arguments made by Arc, USAID and others in the sector for a long time – that providing finance for clean energy has enormous benefits for women, in terms of health, time management, and their ability to oversee their children’s education – an irrefutable theme from the study.

But DRE providers like asset finance companies or microfinance institutions doing solar energy lending face significant obstacles, not least that they are “competing against free”, as Niki put it. Grid energy is often obtained by end-users at no cost, and traditional fuels are heavily subsidized, making market penetration challenging.

But this challenge is only one of the many implications of the research for different stakeholders, and Niki finished the webinar presentation by summarizing the implication for financial institutions, donors and policy-makers, energy companies, and – perhaps most valuable for this audience – for investors.

Paul Needham is CEO of Simpa Networks – an asset finance company selling solar home systems and fans in India through a ‘progressive purchase’ finance model and one of the institutional partners in the Diaries research, and he joined us for the webinar. He outlined several ways he and his team have adapted their offering based on this better understanding of clients’ energy usage and activities, including marketing by women to women, based on women’s clear energy needs.

Finally, the webinar was opened up for audience Q&A, including on the challenges of making a pay-as-you-go business models work in challenging working-capital demanding contexts (especially as it concerns financial forecasting), and on the gaps in the research, and the prospects and potential subject scope for Energy Diaries II, perhaps to look at completely off-grid farmers, urban energy usage, and the seasonal patterns which this short pilot could not.

For those of you interested in more detail of the study, a fact sheet is available on the Arc website here, and a longer report is forthcoming. The Arc team would like to thank MFO, USAID, and of course GIIN for hosting this discussion, and bringing in such a high-level audience to hear the findings, and better think about the impact investment opportunities available in the distributed renewable energy sector.