Interview with Avishek Malla
Director of Engineering and Operations for SunFarmer Nepal, a subsidiary of SunFarmer International
Location: Kathmandu, Nepal
“Farmers in Nepal could never in their lives imagine having a solar-powered pump”
In 2015, Nepal was hit by a series of devastating crises. One earthquake was followed by another, and the year ended with a trade blockade with neighbouring India, depriving citizens of essential fuel and food. Avishek Malla, Director of Engineering and Operations at SunFarmer Nepal, says that even in the most testing of times, the only option is to keep thinking forwards.
A year earlier, Malla co-founded SunFarmer Nepal, a for-profit organisation providing solar energy to rural communities. He met Andy Moon, who co-founded SunFarmer, a non-profit based in the U.S. and Canada, whilst they worked together on a project for a hospital in a remote area in 2012. Moon wanted to build a company which could have more impact on local communities.
Malla had a very defined vision of what this company could be. Whilst in his previous job, he saw how energy subsidies were misused. The Nepalese engineer used to promote solar technology through donor programmes to remote, off-grid areas at the Alternative Energy Promotion Center (AEPC). “One of our major problems in government was that solar companies were not very ethical with the subsidies they were receiving for solar energy”, he explains. “They were not maintaining the systems, which were financed by taxpayer and donor money. Subsidies are not long lasting, and we needed a sustainable model, which is why we ask customers to pay a nominal fee, with agreements for five or eight years, with the prerequisite that they maintain their systems”.
To avoid the subsidy bandwagon, Malla says that it was important that Sun Farmer Nepal develop a niche in the market. In Nepal at the time, you could only buy just three different kinds of pumps for agricultural systems. “If I wanted to eat oranges, I was just getting apples”, says Malla, who has also studied renewable energy in Australia. He was motivated to nurture, in Sun Farmer Nepal, something “functionable and sustainable” in terms of technology and economics.
“There are 2.2 million farmers in Nepal, paying US$2000 for a pump, and they could never in their lives imagine having a solar-powered pump. We started bringing in a bigger range of economical, smaller pumps, and we have created a market for that. The government has seen how international NGOs are supporting us and showing interest”. To date, Sun Farmer Nepal has powered 1,884 kWh with their lease-to-own products in the agricultural sector, and a number of solar projects have been developed for farmers in Chitwan, a district full of crops such as maize and rice.
“We think a little bit differently”, adds Malla. “We try to see where the needs are. However, it has to be profitable”, he adds, acknowledging Sun Farmer Nepal’s status as a for-profit subsidiary of Sun Farmer, a non-profit based in New York. “We wanted a sustainable business model, so we took a deliberate decision to be for profit. We want to keep providing energy security with investment returns”.
The positives and negatives of government subsidies
In 2015, the Nepalese government introduced solar financing for projects with a subsidised interest rate. Nepalese interest rates are high, says Malla, due to a currency vulnerable to inflation. Sun Farmer Nepal began to work on more alternative projects, and the impact has been rewarding. For example, Sun Farmer Nepal builds health and education facilities and centres on a project basis; it provides solar at the Lungra Health Clinic in Accham in the remote west, and an 18kW system which was installed at a college in Kathmandu.
80% of Nepalis in rural communities rely on manual farming for their livelihood, carrying and pumping water but also using costly diesel fuel. In the village of Ayodhyapuri village in Madi, Chitwan, Malla remembers a meeting with Sarita Regmi. The cattle farmer saw a 20% increase in milk production once she acquired a solar pump, but she also put the water savings to further use by reusing the water pumped for her fish pond. “Sarita took the excrement to her grassland and placed it in her fish pond, creating fish feed through its algae formation. She talks about raising more cattle, now that she is saving time from manually pumping water. She pays 2000 rupees a month for 36 months, with a system which is US$600, and she pays US$20 a month.”
Whilst there are annual goals of kilowatts of solar or numbers of pumps to reach (the company records that 48 million liters of water has been pumping on farms), the business model for Sun Farmer Nepal is always changing, says Malla, due to a variety of challenges that require more strategic thinking—the government for one. Malla hints at political pressures behind every changing subsidies announcements. “There are always unstable, changing policies which disrupt and create chaos in the market now and then. For example, we did around 40 or 50 water pump projects with subsidies, and then suddenly there was an announcement on a 60% subsidy on water pumps. There was a long pause, because implementing a policy takes time, there is a lag from announcement to delivery. The government is supportive and wants to do good things”, he adds, “but they’re sort of killing the market.”
Talking to farmers on their own terms
Other challenges, says Malla, include fostering awareness and adoption—promoting a technology that the farmers don’t know about when you reach them. This is also down to a lack of information and data about local resources, which often means a reliance on secondary data. “We identify five or ten focussed indicators for a pump, map them out, select the top five, verify our data, and this approach—of doing the design from the beneficiary end—works. Go to the market and look at the requirements”. Sun Farmer Nepal invests in awareness workshops, demonstrations, and closed group meetings. “Farmers need to touch and feel the product, and already have a lot of borrowing problems, so we help them understand their requirements and benefits, in three-year terms. We talk in their language”.
Malla saw an opportunity to show the government a better way to use money by bringing in all the stakeholders on board from the very beginning: NGOs in the agriculture sector, cooperatives for microfinance institutions, bilaterals, the government. The first step in fulfilling a vision, says Malla, is to create the environment, which took time. Yet down the line, the venture started to click into place for people, showing them what worked. He admits that this is an uncommon situation for a private institution like Sun Farmer Nepal to be in.
Finding hope in the wake of disaster and trade blockades…
The 7.8 magnitude earthquake in the summer of 2015, followed by a 7.3 earthquake, and the winter trade blockade from India, which provides 70% of Nepalese imports, provided an important space for Malla’s team to work in. Disaster relief was a necessity in the mountainous, landlocked country. Today, over a year later, reconstruction work continues to rebuild infrastructure such as health facilities in an epicentre area, energy systems, and water pumps for drinking water systems. There are also projects on community irrigation. In all, 2,550 kWh has been powered in earthquake relief, and a 1.1kW system was built at the Bocha Health Post in Dolakha, which was near the epicenter of the earthquake that struck. “We’re slowly rebuilding and taking a vital component at a time, like water, a fundamental need”, says Malla. “We are also promoting the technology and the services we can give. We squeeze down our margins with attractive prices and support services. People are suffering”.
As for the months-long trade blockade, Malla describes how it was a chance to go back to the drawing board, and speak to stakeholders in more detail, earlier than planned. What some could construe as a devastation business-wise—how to import panels or batteries when there is a blockade from India and destroyed Chinese borders after the earthquake? What to do but put all projects on hold when there is no supply or transportation? For Malla, it bought time. “There was no petroleum coming into the country, our vehicles were dead, and there were a lack of commodities, such as food. It was an opportunity, however, to think about what to do next in a cash-strapped society with blocked borders. We could sit and do nothing, or the alternative. That’s how we started January 2016. This year, we introduced solar technologies for agriculture, such as the solar irrigation systems. None of the commercial banks, financial institutions lent for solar technologies, so we started lending”.
Finally, the ink is freshly signed on a deal with a major commercial bank to enter into the market. “This will change the dynamics of the market; we now have the backup of a big financial partner, and foresee good scalability because there is a lot of demand in that sector”. Currently, Sun Farmer Nepal is yet to reach scale; for example, in 2016 there Sun Farmer Nepal ran a hundred projects on water pumps for 2016, a profile of something like half a million dollars—not too much, says Malla. “Now we really have the liberty to run.”
—Nabeelah Shabbir, @lahnabee