energy

If you haven’t voted in the People’s Design Award competition sponsored by the Cooper-Hewitt National Design Museum, the clock is ticking!

Acumen Fund investee D.Light Design is a nominee.

You can cast your vote HERE. Hurry - you have until 6 pm EST today to get your vote in!

UPDATE: As of 9:45 AM EST, D.Light Kiran was in FOURTH place (out of 196). Do submit your vote and push D.Light to the top!

Today is Blog Action Day, an annual event that unites the world’s bloggers in posting about the same issue on the same day with the aim of sparking discussion around an issue of global importance. This year’s issue is climate change.

Climate change – important topic. Glad to see that we are now all looking ahead and considering how our actions will permanently impact climate, how we will impact the lives of our children and grandchildren. And if we act now and cut back it is not too late to make a difference for them.

But what about the poor? The developing countries? Sure, they benefit if we save the planet, but is it fair that we are asking them to also cut back with us to help solve the climate problem? After all they don’t have a teenager with a Camaro to give up, or a roadtrip in a Winnebago to trade in. And they are now paying $4/gallon for gasoline because the rich countries used most if it up when nobody was looking!

If we want the billions of poor along, we have to help. We talk about carbon credits for developing countries to ease the transition. We have to make this real - and easy. We talk about using modern cleantech solutions that will create new and affordable energy for the world’s poor – but we have to make this accessible AND affordable. We have to help build businesses to deliver these solutions. This will be hard, it will take a long time, and we might not get rich doing it. But that is what it will take.

We’re seeing potential to bring real cleantech solutions to the developing world through our energy portfolio at Acumen Fund. High-efficiency LED lights powered by solar panels, small hydro to drive village electrification, bioenergy from agricultural waste residues are examples of initiatives that we have supported. These solutions can make a difference – both to address local poverty AND to save the global environment.

One of those solutions, Acumen Fund investee D.Light Design, is a nominee for the 2009 People’s Design Award for its newest product, a super cheap solar lantern that provides an affordable and clean replacement for kerosene lighting in rural India and Africa.

As part of National Design Week, the Cooper-Hewitt National Design Museum is sponsoring the competition in which good design is chosen by the public.

Want to help? Please vote for D.light here and spread the word to your networks and friends. You have until October 20 at 6:00 p.m. EST to vote. The winner will be announced live at the National Design Awards gala in New York City on October 22.

Julia is a summer associate in the East Africa office for Acumen Fund working in the energy portfolio. He is also a second year MBA student at Columbia Business School where she is an active member of the Social Enterprise Program and co-director of Pangea Advisors. Prior to Columbia, she worked for four years at KPMG Advisory where she advised private equity firms in their investments in Madrid, London and various international offices. Julia received a diploma in Business Studies from the Universidad Pontificia de Comillas, Madrid.

“Pata stima, lipa pole-pole” (swahili) means “Find electricity, pay slowly”. This advertising campaign can be found in newspapers and on bill boards all around Kenya.  The campaign promotes a joint initiative of KPLC (the state-owned energy distributor) and Equity Bank to provide loans to those low income consumers willing to get connected to the grid but unable to pay the full $660 fee up-front.

These types of measures are much needed in Kenya. It is widely understood that Kenya has an under-developed energy sector, with insufficient power supply and low demand. But it is not until one experiences the power outages that one realizes how much urgent action is needed. Kenya energy per capita consumption is around 130 Kwh which is 18 times below the world average and only 15.3% of the population has energy access, falling to 3.8% in rural areas.

Biomass energy accounts for about 70% of all energy consumed while petroleum and electricity account for only 21% and 9%, respectively. Hydro Power constitutes 71% of this capacity and is mainly provided by the state-owned generator company, Ken Gen. Independent Power Producers (IPPs) have not had historically a relevant role in the market, but this trend is changing with the current liberalization of the sector. Current power deficit is aggravated by the deforestation of the Mau Forest and the closure of the Masinga hydro power plant due to drought.  Drought is on-going in Kenya and other hydro power dams may soon face closure as well.

But not everything is bad news, as a summer associate at Acumen Fund, I feel lucky to be here to live a moment of transformation in the sector.  Transformation has taken place from both the public and the private sector side. The public sector has realized the importance of bringing the private sector on-board and has announced a feed-in-tariff in which KPLC will sign a PPA (Power Purchase Agreement) and pay a tariff to those IPPs operating wind, hydro and biomass technologies selling power to the grid. This new incentive will help many projects become commercially viable. On the private sector side, there has been an increase in the interest of producing energy and of improving access for low income communities. It is encouraging to see that, despite not having any government incentive or subsidy, solar companies are exploring products, financial schemes and distribution networks to reach rural areas and/or low income consumers.

In the one month that I have spent at Acumen in Nairobi, I have dedicated half of my time to conduct research of the energy sector and talked to all types of players in the industry from the regulatory body, the UN, the International Finance Corporation, IPPs and potential entrepreneurs and I have learned a great deal about the sector along the way. The other half of my time has been spent analyzing potential investment opportunities for Acumen. These have been memorable experiences and I will always remember the emotion on the face of an entrepreneur as he signed the PPA for his small hydro power plant.

Acumen has tremendous opportunity in the energy sector in East Africa, although it doesn’t lack important challenges. Amongst them, ensuring that the private sector initiatives effectively reach low income communities and are not just driven by the new economic incentives, addressing the real energy needs of the low income consumers with appropriate strategies, and sorting out the necessary financing and distribution. A long way forward, but for sure Acumen has energy for that and for more!

The team at Acumen Fund would like to take a moment to congratulate Christine Eibs Singer on her promotion to CEO of E+Co, one of our friends and allies in the social investment space. At the same time, we want to applaud retiring CEO and E+Co founder Phillip LaRocco. They have both shown incredible vision in starting E+Co and proving to the world that small enterprises can deliver innovative solutions to the world’s neediest if they are supported in the right way. They have also been terrific collaborators with us in renewable energy which has been a new focus area for us at Acumen. Congratulations again to the entire E+Co team and especially Phillip and Christine.

Acumen Fund has long admired the TiE - “The Indus Entrepreneurs” network - an impressive and fast-growing community of top Indian entrepreneurs, venture capitalists, lawyers and management professionals. TiE demonstrates the power of community with 53 Chapters in 12 countries, spread across 5 continents.

We are excited to share that D.Light Design, one of Acumen Fund’s portfolio companies, has been nominated as a finalist for TiEcon 2009’s 50 “Hot Emerging Companies” award. From among 1,200 nominees, finalists have undergone a rigorous screening process by TiE’s industry judges. D.Light Design’s mission is to deliver safe and affordable lighting and power solutions to households that lack reliable energy supply. It is exciting to see a social enterprise be considered as a peer among fast-growth commercial companies. This is evidence of the potential to for companies to achieve scale and profitability, while having a material impact on the quality of life of the poor.

The TiE Awards will be decided by collective voices. Voting closes tomorrow on May 7, 2009. We encourage our community to get involved-vote for D.Light Design and other innovative new Indian companies.

The New York Times ran a fascinating article last week about the multifaceted impacts of third world stove soot: “Third World Stove Soot is Target in Climate Fight.” Author Elisabeth Rosenthal deftly explores the intersection of poverty, health consequences and the environment through the lens poor customers’ cooking habits. 

The problem of inefficient, smoky stoves is one Acumen Fund is trying to develop a solution for – but it’s been elusive.  Low-income people cook with wood that, while laborious to find, is still relatively plentiful and free.  (An exception here is Haiti, which has been ravished by deforestation caused by villagers and city-dwellers denuding the countryside in search of wood.) Those interested in a new approach might want to check out MIT MacArthur Fellow Amy Smith, who has been working on the charcoal issue.

Yes, the stoves are a problem – but this is not simply a technological issue. There are lots of stove technologies – rocket stoves, solar cookers and the like – out there that can do the job better and use cleaner fuels, but the capital costs are higher and the distribution models are complex. Incentives from the carbon markets may be part of the solution, but they have not provided enough benefit to drive the adoption of clean cooking products on their own. Even more, getting certified through the Clean Development Mechanism of the Kyoto Protocol is a long and complicated process, a real barrier for start-ups interested in attacking the stove problem.

We are committed to finding a solution here, and welcome any suggestions or thoughts as we move forward.  These stoves, along with the lack of lighting, are really the two biggest energy issues faced by the poor today.

I’m just back from three weeks in India including several days with the D.light team in Noida. It’s so exciting to see the team in action. In a year they’ve built a global organization in India and China and have built real teams around sales, product design, manufacturing, institutional relationships, etc. And I also got to see Acumen Fund fellow Heidi Krauel in full swing in Business Development where she is helping the CEO Sam Goldman think about all the strategic opportunities in front of the company and how to really execute on the right ones.

Really a different approach to creating lighting solutions for the poor and completely based on the premise that if they focus on the preferences of the (poor) consumer with world-class execution that this will quickly scale in a way that hasn’t happened in the past.  And it is great to see support of their approach in the media, like this recent NY Times article.

But what really has us excited is the excitement at the consumer level.  If you have a chance, visit D.light’s website to see hear some of the remarkable stories of their customers and how light has impacted their lives. And also take a look at the letter that D.light just received from a resident in Orissa living in D.light’s first 100% solar village. We’ve got thousands and thousands of villages to go, but a very exciting start.

Yesterday morning, Acumen Fund hosted a monthly breakfast for members of our Partner community featuring Acumen Fund Director of Capital Markets and Energy Portfolio, Raj Kundra. With 30 guests in attendance, this promised to be an engaging discussion.

Brian Trelstad, Acumen Fund Chief Investment Officer, opened up the discussion with reference to Acumen Fund Advisory Council member Peter Goldmark, who observed in 2006 that marginal changes in the climate will affect those on the margins first and most profoundly. Later that yearin no small part due to Peter’s influence - Acumen Fund made a Clinton Global Initiative commitment to launch an energy portfolio, and we began our work in energy 12 months ago.

Raj began the talk with a description of the Acumen Fund model, and how we raise philanthropic capital to invest in breakthrough enterprises that provide critical goods and services to the poor with a focus on health, water, housing, and most recently energy. So while Acumen Fund acts like a venture capital firm, we differentiate ourselves with our focus on large-scale social impact, coupled with economic sustainability, as our primary objectives. We invest in management assistance to support our investees both before and after we make an investment. And we believe in the power of sharing what we are learning, based on the recognition that in a world with trillions of dollars of capital, we will always, by definition, be a relatively small player.

Raj continued with a discussion of the poverty trap that poor people face with respect to energy. As of 2005, poor people spent more than 14% of their incomes on energy, and Raj estimates that these numbers have increased to over 20% with the recent surge in energy prices. In addition, the poor often use fuel sources that are expensive, inefficient, and dangerous (for example, kerosene lamps or burning wood for cooking in open spaces). Finally, with limited access to energy, productivity (whether on the farm or the result of the shortened day for studying or work) is simply lower, all of which contribute to a poverty trap.