Off-grid energy takes centre stage at Asia conferences

Ahead of the next Smart Villages workshop focusing on the ASEAN region, we (Dr Heather Cruickshank and Molly Hurley-Depret) traveled to Manila to attend two recent conferences focusing on Asia and energy: the International Off-Grid Renewable Energy Conference and Exhibition (IOREC) and the Asia Clean Energy Forum 2014 (ACEF), held 16-20 June at the Asian Development Bank in Manila, Philippines.

The week began with two full days focusing on off-grid energy during IOREC, offering an excellent opportunity for entrepreneurs, NGOs, policymakers and some financiers to meet both formally and informally to discuss the opportunities for off-grid energy. Challenges were on the table, but it was clear that the atmosphere was hopeful and collaborative.

We thought it was an excellent opportunity to meet people who could attend our next Smart Villages Workshop in Malaysia which will focus on Southeast Asia. The people we met had two points in common: a deep and passionate commitment to their work for energy access and the fortitude to achieve this goal despite all odds.

Nano-, micro-, and mini-grid financing

We were excited to see enthusiasm for nano-, micro- and mini-grids, technologies that can really make a difference to millions if they achieve scale. The question of how to fund these off-grid systems was the subject of much debate. Should banks fund them? Should angel investors provide start-up capital? Or should governments and donors take equity in them?

Attendees (and we) felt that ‘all of the above’ was the answer and it truly does depend on the particular project and the level of risk involved.

One point on which almost everyone seemed to agree – market-based and service-focused approaches to off-grid energy are likely the most sustainable in the long-term. Several speakers told their stories of providing energy services in Nepal and Bangladesh as well as East Africa. It was impressive to see the success stories as well as the stories of failure. However, there is no true failure, only lessons to learn.

We were nodding and taking note as many of these themes also emerged at the Smart Villages initiative’s recent workshop focusing on East Africa. To us, it is so crucial to see the linkages and differences between world regions and this was also in evidence at IOREC/ACEF.

“Aggregation” and “disaggregation” were two other core topics, especially for smaller off-grid projects that often have high transaction costs. Aggregation means bringing together capital to fund multiple smaller projects, when there is a sufficient number of projects to fund. Where this does not exist, the challenge is rather disaggregation – breaking up capital to fund those smaller projects. It was clear that this was a core priority for the UN’s SE4ALL finance committee. “Patient capital” was also much-discussed – it does not need to be re-paid immediately and has a high risk tolerance. While most investors would not fall into this category – who would? Angel investors, donors who ordinarily give grants and those who crowd-fund could meet part of this challenge, allowing others to then gain confidence and invest.

‘Productive uses’ of energy

We also found it fascinating to think about solar home systems (SHS) alongside community infrastructure for productive uses, like education and training or community businesses. It seems that energy entrepreneurs and policymakers are all considering bigger impacts which are truly at the core of any ‘smart village’ where people can achieve their personal and collective goals, whatever those might be.

It reminded us of our recent visit to Terrat, a Maasai village in Tanzania that uses a bio-diesel mini-grid to power a radio station, a cheese-making business and many small businesses like grain millers, barbers and welders. Capacity building and training were also big themes – whether for consumers, financial institutions or entrepreneurs themselves. All of these types of capacity building can help villages to become stronger and more economically buoyant in the long-term, whether by funding reading skills and computer training or fresh thinking on financing and risk.

Policy and regulation for off-grid energy

Policy and regulation were frequently mentioned – in fact, in some cases the lack of regulation can inhibit off-grid energy businesses from getting off the ground. It is a matter of ensuring that enabling policies and regulations are created – but most importantly, implemented – by regional, national and local governments.

The importance of policy and regulation forms part of the core of the Smart Villages initiative. Without the right policies and regulations for energy – and government commitment to them – energy access by 2030 may not become a reality. Luckily, there are many committed people keen to ensure that this goal is reached. Perhaps most crucially during the week, scale was never forgotten. There was truly a sense that everyone in the room wanted to reach the largest number of the people possible, both for humanitarian and business goals.

Scaling up for 2030 goal

Scale is a necessity and the Smart Villages initiative strongly supports policies, regulations and of course business models that prioritise achieving scale. However, there were not enough financial institutions and other types of investors present. The public sector was well-represented, but aside from SMEs, where was the private sector, particularly big financial institutions and multinationals with CSR funds? The conference agreed that this will be a continuing goal. This is also crucial to our smaller-scale workshops and we found that it truly makes a difference in the scope of discussion that we’re able to have.

ACEF energy tracks

ACEF brought together a high-level ministerial roundtable but perhaps most compelling were the different ‘tracks’ that ensured that attendees were following the issues closest to their heart. The “Energy Access” track was closely followed by the Smart Villages Initiative, but we were also keen to hear the outcomes of the finance, technology and policy tracks.

The highlights from each ACEF track were summarised in a closing session which highlighted 1) decreasing the level of financial risk to convince stakeholders of the viability of clean energy, 2) the importance of international collaboration on technology and the sharing of failures, not only best practice, and 3) the importance of national energy policies vis-à-vis clean energy.

What is next?

Throughout both conferences, the United Nation’s Sustainable Energy for All (SE4ALL) and the Asian Development Bank’s Energy for All linked provided the common thread with their aim to provide 1.3 billion people energy access by 2030. This common goal motivates everyone involved in off-grid energy and it is only through collaboration that we will make this hope a reality.