by Ms. Alison Wise
The clean energy landscape is changing every day, accelerated in its development because we are experiencing a kind of synergy between the invention of the internet and the continued innovation in renewable energy technology. It may be a bit of a stretch, but there are many examples in our history where two seemingly distinct economic values came together to create whole new trades and industries.
In the 12th century, the geographic proximity of a town known for their salt trade and a neighboring fishing village aligned their products so that preserved, salted fish could now be distributed widely throughout Medieval Europe, sparking in turn other industries grown from these new routes. If we can be creative about recognizing the power of these types of synergies, we have a gigantic opportunity to rapidly transform our global economy.
The Synergy Network concept or "proposal" outlines a potentially new way of aligning seemingly disparate economic and technological activity towards accelerating what I'm terming "clean economic development," in this case, within emerging economies. The stakeholders in question in terms of the clean economic development opportunity in these emerging markets represent the billions of people living on less than two dollars a day, often described as "bottom-of-the-pyramid" markets to signify their place at the base of a hierarchical allocation of global wealth, and the one and a half billion people with no access to what we take for granted: electricity.
"Synergy" of different technologies applied for clean economic development
Within renewable energy industry and governmental stakeholder circles, there is a lot of talk about accelerating market transformation towards clean energy, and the catch-phrase "at speed and scale" is often a mantra repeated as a sort of rallying cry. From a broad perspective, the synergy in question for this concept is about recognizing how the right bundling of resources could facilitate a sort of viral development potential for clean energy and community economic opportunity. It is important to recognize that there is already a lot of activity in this space in terms of social enterprise and emerging economic strategies attempting to penetrate these markets with "clean" or "appropriate" technologies.
I will highlight some of the ways that these partnerships and projects fit into the concept I'm introducing, with the recognition that there may be activities that are not captured given the many players already developing their own models. I see this as the start of a conversation about this idea, with the hope that it may contribute positively to the acceleration of clean economic opportunities already in development and/or create new opportunities.
The thought originated in a few different streams; one was the advent of the mobile giving campaign for the "Text for Haiti" program, where a text message would initiate a $10 donation to Haitian refugees through the AT & T Mobile Giving Foundation. The thought was, "What if we could facilitate micro-investments as opposed to donations?" The other point of origination coincided with conversations I was having with social entrepreneurs for the need to organize and coordinate with one another in terms that would represent a kind of trade association. Met with the response, "Great idea, but right now we need capital that we can't seem to access...," I thought an interesting approach might be to explore how we could organize this activity around a new source of capital for their work.
The basic story overall is that this idea centers around a pretty heady concept in terms of the virtual identity we maintain by access to information communications technological (ICT) devices. Mo Ibrahim, African leader and philanthropist, observed in a conversation with Charlie Rose that, "(M)obile devices brought the possibility of civil society to Africa..." Taking that a step further, ICT, portable renewable energy and a catalogue concept of appropriate technology distribution, using mobile devices, aligns many different governance and humanitarian concepts together, with a decidedly market driven approach. The end goal of this synergistic system is to leverage our virtual identities by aligning access and management of electronic financial resources with the distribution of clean technologies and brokering of micro-finance, in a system that is powered in the field by portable renewable energy.
So, to restate the goals of the Synergy Network:
1. To rapidly accelerate the development of clean economies in rural areas of the developing world ;
2. To greatly enhance the quality of life of the poorest members of human society by marrying up the distribution channels for clean technologies and micro-finance services; and
3. To monetize the transactions in this new economic system so that wealth is both generated and distributed in a viral manner.
The most basic concept for the Synergy Network is the creation of a social venture fund using mobile technologies to aggregate micro-investments that are in turn dispersed using mobile technologies to bottom-of-the pyramid (BOP) clean energy entrepreneurs. A key differentiation in our approach to understanding the economic opportunity of these emerging markets is our characterization of BOP participants as entrepreneurs as opposed to a "market;" they represent clean economic developers themselves by bundling clean energy generation services, micro-finance services and clean technology distribution services. This is a very "systems based" approach to the problem, broadly defined as the current inefficient system in developing clean economies at the base of the global populations' pyramid.
Friends in Silicon Valley have pointed out that this new system would have exponential benefits in terms of access to engineering intelligence and other observations that might benefit economic interests more broadly defined. For example, there are many inventors who could greatly benefit from understanding the needs of these communities and engineering their technologies accordingly.
At a very basic level, there is a need to drive down renewable costs to enable BOP entrepreneurs to participate in this game. And by cost reduction I don't mean the bleeding edge of research and the industry's finest equipment; rather I mean constructing the cheapest possible functional systems within the constraints of a given geography. In other words, 5% efficiency is plenty if it gets the job done for 1/100 of the price.
Paul Polak and his book Out of Poverty, which represents a "boots on the ground" viewpoint, is convinced that if you can create business opportunities for entrepreneurs that cost no more than $1100 (landed total), micro-finance can step up for the funding. His idea is to create franchise-style opportunities, similar to what I'm suggesting. In the energy arena, he envisions cheap solar troughs on a trailer on the back of a bicycle, riding around to charge up cell-phones for a fee.
For a near term objective this could suffice, the major caveat being that we don't have an entrepreneur base that is sophisticated enough in the BOP to think about distributed power generation to the degree that it will offset many large carbon-heavy power projects. True academic rigor would suggest that we need to measure and compare the impact from small projects in order to prioritize investment. In other words, we need to determine what the best ROI is for an affordable solar energy production solution in the BOP. This is a "Design for the Other 90%" question.
The idea is to build a global network for clean economic development. The network itself will define how we create this new world, but in a very basic sense we want to align the better angels of our nature with the cleanest technologies we have for a viral spread of the pursuit of happiness. The approach here is to look at this in terms of designing a system that creates a positive feedback mechanism for accelerating clean economic development, a virtuous cycle in every sense of the word.
Synergy Network system overview.
1. Micro-investments are made using handheld technologies like cell-phones and blackberries. The relationship between our iPhones, cell phones, etc. allows us to instantaneously access communications to anyone in the world at any time provided they have a cell phone as well. It also extends our persona to the electronic/cyber realm in that newer versions of these technologies allow us to browse the internet from our handheld devices. In a real sense, we as individuals have a cyber identity as well, an extension of global citizenship in terms of our engagement with global communications platforms. At the same time, messages to us as individuals through other media channels can capitalize on the way in which we are so closely connected to the ability to engage at any given time.
2. Micro-investments go to a Social Entrepreneurs Fund, modeled on the premises of many aggregated investments such as mutual funds, only the companies in our portfolio are assessed by different metrics than a traditional mutual fund.
3. Aggregated micro-investments are distributed through the SE Fund to SME's that are aligning micro-finance with renewable energy generation, commercial entities that are enabling BOP entrepreneurs to franchise a micro-utility, micro-financial service to their community, serving as a distributor of clean technologies like solar cook-stoves and water purifiers to end users. The idea is to prioritize financial access to the SE Fund to those that are working on the systemic issue of creating a clean energy base for economic development, using the best micro-economic tools available to create opportunities for a better quality of life.
4. The BOP community members who are recipients of the entrepreneurs services (power delivery and micro-loans both for traditional and clean/appropriate tech purchases and funding) will be paying for these services that go back to the SE Fund as returns on investments, and whose...
5. ... dividends are then distributed back to the micro-investors.
The over-arching focus for the approach is to come up with ways that can act exponentially in terms of the creation of localized clean economic infrastructure. The premise is that by leveraging information communications technology and social media, combined with innovations in micro-finance and portable renewables, we can create the potential for a viral expansion of local clean economic communities in the developing world. In terms of tools in the toolbox for combating the exponential impacts of human activity on the earth's ecosystems, it seems an appropriate strategy to look for exponential solutions. In this definition, the components of a healthy economic system represent clean energy powering clean technologies facilitated by services that are "owned" by the community.
The question may remain about the need for mobile technologies in this system's design. There are many necessary benefits to this as the linchpin:
1. The immediacy of access to the decision of a micro-investor for the financial fuel for this engine of economic growth;
2. Mobile renewable generation allows for the fluidity of power distribution to the community, leap-frogging the need for infrastructure build-out;
3. GIS and visualization tools can track field operations of BOP entrepreneurs; and
4. Electronic financial transactions allow for the security of BOP entrepreneurs in the field as well as the ability to track the stream of transactions in the system (i.e. the BOP entrepreneurs works from their handheld device as opposed to a phone and PC in a cubicle).
The reliance on mobile technology for electronic financial transactions is thinking several steps ahead in terms of the ability to create economic opportunities without hard currency for the security of BOP entrepreneurs, as well as championing the enhanced fluidity of financial resources that can create more efficiencies in transactions. As an added benefit, this approach may also address issues of governance corruption in conflict ridden nation-states.
To answer questions about the availability of wireless communications in the developing world as a necessary component of the Synergy Network, there has been interesting work that create elements of a communications infrastructure in developing countries: FabLab is seeking to address the need for better access to wireless networks. In this case, parabolic reflectors are built from locally available materials, ironically USAID oil cans in some cases, and boost the capabilities of off-the-shelf access points to create long links in a wireless mesh. The organization is taking this approach further to explore the value of an off- grid network to local communities (since Internet connections are still slow or prohibitively expensive in many parts of the world).
There are opportunities for other contextual innovation as well; in the area of financial mechanisms to fund the portable renewable generation, for example, exploring a "micro-PPA" (power purchase agreement where the consumer of power purchases the service of renewable power, and not the RE installation itself) would be another way to accelerate the use of these portable renewable technologies in the field. In terms of some activity in the renewable micro-finance space, the Solar Home System (SHS) dissemination program in Bangladesh is considered to be one of the most successful of its kind in the world, bringing power to rural areas where grid electricity supply is neither available nor expected in the medium term.
Between January 2005 and July 2009, nearly 350,000 SHSs have been installed in the country. Supported by grants and soft loans from the World Bank, GTZ, KfW and the Asian Development Bank, installation rates have increased to a rate of more than 15,000 per month. The Bangladesh program is implemented on the ground by micro-finance institutions, known as Partner Organizations (POs), which finance the SHSs through a loan scheme which involves a less than 10% grant funding element. The Grameen Shakti model is also moving towards some of the principles discussed. Grameen Bank intensively developed its energy division, Grameen Shakti (GS), during the last six years and is now responsible for two thirds of all installations under the SHS. Second to GS comes the BRAC Foundation, part of BRAC which is the biggest NGO in the world.
The final thought on synergy encompasses the reimagining of what we mean by an "on-line community." Kiva International has created a very compelling model that leverages online access in terms of "micro-loans" from third party "philanthropists" for distinct purchases by BOP recipients. PowerMundo is targeting markets in Peru for distributing clean technologies financed by micro-loans.
There are myriad other similar endeavors by social entrepreneurs, and they are telling their stories through online media like YouTube and social networks like Facebook. Where the Synergy Network seeks to align the best of social media and ICT with clean economic development is a nexus that has yet to be fully exploited.
In other words, the creation of a global community of micro-investors and social entrepreneurs that is in communication with one another and is managed through wireless mobile devices can inform itself through uploaded video, instant messaging, and other visualization and communications that help coordinate the complexity of the silver buckshot that represents the growing global clean economy itself. To close on a backwards looking note (as we started this article), when the printing press was invented, it was used predominantly to print the hallmark of that era's culture in publishing volume upon volume of the Bible.
Only later did it evolve to publish other materials so critical to managing and understanding relationships, including economic ones. The internet and the variety of communications and visualizations platforms are still at a nascent stage as well. Marrying these new tools with innovations in clean energy and community finance could prove to be a powerful combination in transforming our global economy.
Copyright AZoCleantech.com, Alison Wise (National Renewable Energy Laboratory)