PERU GIVES SOLAR to its POOREST
Peru Solar Power Program To Give Electricity To 2 Million Of Poorest Peruvians
by Don Lieber / 07/15/2013
Energy and Mining Minister Jorge Merino said that the program will allow 95% of Peru to have access to electricity by the end of 2016. Currently, approximately 66% of the population has access to electricity. “This program is aimed at the poorest people, those who lack access to electric lighting and still use oil lamps, spending their own resources to pay for fuels that harm their health,” said Merino. The first phase of the program, called “The National Photovoltaic Household Electrification Program” was initiated on Monday (July 8) in the Contumaza province, where 1,601 solar panels were installed. These installations will power 126 impoverished communities in the districts of Cupisnique, San Benito, Tantarica, Chilete, Yonan, San Luis, and Contai. The program plans to install about 12,500 solar (photovoltaic) systems to provide for approximately 500,000 households at an overall cost of about $200 million. Peru is the third-largest country in South America, with a population over 24 million. It has average solar radiation levels which can reach 5 kWh per m2 a day in the Sierra (foothill of The Andes). Peru is also home to the first major PV installation in Latin America.
a BILLION in the DARK
How Solar-Based Microgrids Could Bring Power to Millions of the World’s Poorest
by Kevin Bullis / October 24, 2012
The village of Tanjung Batu Laut seems to grow out of a mangrove swamp on an island off the coast of Malaysian Borneo. The houses, propped up over the water on stilts, are cobbled together from old plywood, corrugated steel, and rusted chicken wire. But walk inland and you reach a clearing covered with an array of a hundred solar panels mounted atop bright new metal frames. Thick cables transmit power from the panels into a sturdy building with new doors and windows. Step inside and the heavy humidity gives way to cool, dry air. Fluorescent lights illuminate a row of steel cabinets holding flashing lights and computer displays. The building is the control center for a small, two-year-old power-generating facility that provides electricity to the approximately 200 people in the village. Computers manage power coming from the solar panels and from diesel generators, storing some of it in large lead-acid batteries and dispatching the rest to meet the growing local demand. Before the tiny plant was installed, the village had no access to reliable electricity, though a few families had small diesel generators. Now all the residents have virtually unlimited power 24 hours a day.
Many of the corrugated-steel roofs in the village incongruously bear television satellite dishes. Some homes, with sagging roofs and crude holes in the walls for windows, contain flat-screen televisions, ceiling fans, power-hungry appliances like irons and rice cookers, and devices that need to run day and night, like freezers. On a Saturday afternoon this summer, kids roamed around with cool wedges of watermelon they’d bought from Tenggiri Bawal, the owner of a tiny store located off one of the most unstable parts of the elevated wooden walkways that link the houses. Three days before, she’d taken delivery of a refrigerator, where she now keeps watermelon, sodas, and other goods. Bawal smiled as the children clustered outside her store and said, in her limited English, “Business is good.”
Worldwide, one and a half billion people lack electricity, most of them rural dwellers. (In India, for example, 268 million people are without electricity in rural areas, but only 21 million in cities.) The International Energy Agency says the type of power plant installed at Batu Laut, known as a hybrid microgrid, will be essential to bringing power to many of them. That’s because connecting a remote community to the conventional power grid, with its large, centralized plants, is expensive and can take more than a decade. In some cases, geography and economics may never permit access to the grid. Hybrid microgrids can provide dependable electricity by intelligently combining power from multiple local sources, and building them is far cheaper and faster than extending the grid to the areas where most of the people without electricity live.
Optimal Power Solutions (OPS), the Australian company that designed the microgrid at Batu Laut, is doubling its installations this year throughout Southeast Asia and India. And several other companies, including industrial giants like GE and ABB, are developing and selling similar technology (see “Microgrid Keeps the Power Local, Cheap, and Reliable”). The reality, however, is far more complicated. Some early microgrids have run into problems, and the electricity they provide is more expensive than that from central power grids in the city—in some cases nearly 10 times as expensive. The technology involved in microgrids, and the systems used to operate and maintain them, will need to improve significantly if they are to bring reliable power to hundreds of millions of people. “The forecast by the International Energy Agency and other groups is that in 20 years, we’ll still have a billion and a half people without electricity,” says Daniel Kammen, a professor of energy at the University of California, Berkeley, and an advisor for the United Nations’ Sustainable Energy for All program. “Microgrids provide an opportunity to think about a really new model of how to bring energy services to off-grid communities. The question is, will this just be a cute development thing? Or will it become part of mainstream economics?”
Near the village of Tanjung Batu Laut, a large row of solar panels (right) feeds power to an array of lead-acid batteries (left) inside a building. Diesel generators sitting on the covered deck complete the microgrid power plant.
It’s hard to overstate the importance of electricity for economic and social development. Cooling fans make classrooms more conducive to learning, and lights enable students to read and do homework at night. Refrigerators keep food and vaccines from going bad. A steady supply of electricity can fuel economic development, often starting with modest examples of expanded commerce like Bawal’s store. As people make money from such ventures, they can afford more electricity that makes more ambitious projects possible, setting up a cycle of increasing wealth; it’s a pattern that economists have documented in country after country. Over the longer term, giving companies access to abundant, reliable, affordable power makes it possible to develop a robust manufacturing sector with such facilities as chip fabs and automotive plants. In the quest to achieve the UN’s sustainable-development goals, Secretary-General Ban Ki-Moon has said, “clearly the most important tool will be energy.”
Delivering that energy will require some alternative to the conventional grid technology: the IEA estimates that more than two-thirds of rural dwellers who lack electricity today will need power from some sort of distributed source, either microgrids or stand-alone power systems for individual households, because they are far away from the grid or live in a geographically inaccessible area (see “In the Developing World, Solar Is Cheaper than Fossil Fuels”). “Some parts of interior Malaysia cannot be connected to the grid—they don’t have roads. So microgrids are the only solution,” says Ramdan Baba, the head of Malaysia’s rural electrification programs, speaking from the 23rd floor of a towering office building in a sprawling government district near Kuala Lumpur. The government calculated, for example, that connecting one cluster of villages 130 kilometers from the nearest power line would cost 250 million Malaysian ringgits, or about $80 million. “It’s a huge amount of money just to electrify 10 villages with a total of 800 inhabitants,” he says. “A microgrid would only cost about 92 million ringgits [$30 million] and provide a reliable 24-hour supply of electricity.” Baba says the government is likely to meet its goal of bringing electricity to 95 percent of the population in Malaysian Borneo by the end of the year (at the start of the project two years ago, 25 percent of that population had no electricity). The technology’s success so far has led the government to up the ante. In a bid to bring power to even harder-to-reach areas and electrify 99 percent of Malaysian Borneo, it’s planning to increase microgrid installations by 2015.
Now Malaysia’s less-well-off neighbor, Indonesia, and other parts of Southeast Asia are starting to use these systems as well. India has experimented with microgrids; its government is considering how the technology could be used more widely in rural areas and to shore up the notoriously unreliable urban grid (see “How Power Outages in India May One Day Be Avoided”). In the poorest countries, like Bangladesh, where almost 60 percent of the population lacks electricity, governments and outside funders are currently more interested in smaller-scale sources of power, such as solar-powered lanterns and cell-phone chargers or small solar panels mounted on individual homes. The same is true for African countries such as Kenya, where 84 percent of the population lacks power. Yet solar lanterns fail to bring many of the benefits of a local power network. Microgrids, the IEA concludes in its measured language, “are a competitive solution in rural areas, and can allow for future demand growth.”
As microgrids bring power to remote areas, villagers plug in TVs, stereos, and appliances such as refrigerators (upper left), and a convenience store owner starts selling popsicles (bottom). A sawmill runs on one microgrid (upper right).
If the experience in Malaysia is any indication, however, the rollout of the systems could be slow and inefficient, in part because governments and utilities can be leery of new technology. At Batu Laut, the government required OPS to install 600 kilowatts of standby diesel generation capacity, even though the microgrid was designed for a peak load of just 200 kilowatts, because officials weren’t sure it would work as advertised. The story may turn out to be similar in India. “It’s still a new concept,” says Himanshu Gupta, a consultant to the government planning commission in India. “The bureaucrats don’t know anything about microgrids.”
Located in a remote part of northeast Borneo, not far from a deep, cliff-obscured basin that wasn’t discovered by outsiders until the 1950s, the village of Kalabakan had no proper paved road until a few years ago, and residents made do with a couple of hours of electricity at night. Three years ago, the Malaysian government funded a microgrid there, and power demand skyrocketed; new customers include a pair of sawmills that service the local logging industry. Unlike its slightly newer counterpart in Batu Laut, however, the microgrid in Kalabakan is already returning to the jungle. “This place is falling apart,” says Ritesh Lutchman, a senior manager at OPS, as he drives onto the grounds of the microgrid power plant. The asphalt road, although it’s only a few years old, is deeply gouged and buckling, a victim of Malaysia’s soft soil and heavy rains. The solar panels are covered with a thin layer of mold, decreasing power output. Tropical growth is nearly as high as one solar array; in one place it is starting to block the sun. A local utility worker who helps maintain the power station can’t find the key to the control room and has to pick the lock with a screwdriver. Inside, it’s hot because an automatic cooling fan has failed. Lutchman suspects that the heat could be damaging the expensive equipment, shortening its life.
Worse, half the microgrid isn’t even getting power. Because the output of its diesel generators wasn’t synchronized, only one generator can run at a time, and one can’t provide enough electricity to power both of the distribution networks that deliver electricity. Lutchman didn’t know about the problem because, days before, local workers had disconnected the data hub that was the only communication link between the microgrid and OPS. The workers were using it to surf the Web, something Lutchman learned about only when OPS got a large bill. The trouble at Kalabakan reflects a deeper problem: there is no practical model in place for maintaining and operating a microgrid. The government pays for the system; companies such as OPS design it, install it, and keep it working during a two-year warranty period; and then, in the case of Malaysia, they turn over control to the local utility, which is what happened at Kalabakan. While OPS still monitors the microgrids it has installed, after the first two years it is no longer paid to maintain them.
The utilities aren’t set up for microgrids, Lutchman says: “Sometimes the utility will call in someone who understands generators, but he doesn’t understand how they connect to the rest of the system.” The current partial power outage happened after a diesel generator was taken offline for a regularly scheduled overhaul. When it was reconnected, its voltage output wasn’t adjusted to fall within the specifications of the microgrid’s automatic control system. Fixing that is a simple adjustment, Lutchman says, but one the local utility workers didn’t know to make. The utilities didn’t even ask for the microgrids, he says. They were just given them, without the training they would need to maintain them.
The World Bank recently issued a report that warns of some of the challenges. Pepukaye Bardouille, a senior operations officer at the agency’s International Finance Corporation, says her group is “excited” about microgrids, but they’re “trying to inject a dose of realism.” Bardouille explains, “What tends to happen is a few examples are touted as a solution on the basis of technology or just cost. But ways to deliver the technology and maintain it are actually so much a part of the solution that if those things aren’t dealt with, it’s just not sustainable.” Ramdan Baba says his government is working on a new way to fund and maintain microgrids. The company that designs and installs the technology will be given a license to operate it and receive a guaranteed price for the power it produces; it will make a profit only if it can keep costs under control and keep the grid producing power for the length of the contract. This summer at OPS’s Malaysia headquarters in Kuala Lumpur, the company’s engineers and managers were busy with phone calls, meetings with government officials, and last-minute calculations. The key issue was estimating the cost per kilowatt-hour of the electricity the microgrid produced, which would be key to establishing the price OPS and other companies would get paid. Too high and OPS would reap a windfall at the expense of the Malaysian government; too low and the company would be stuck maintaining a money-losing operation.
Microgrids face another looming problem, this one technical. Solar panels and diesel generators can last for decades, but the batteries that make them possible fail much more quickly. “With a microgrid, you typically need an energy storage system that, with current technology, you have to replace every three or five or seven years. That’s a huge capital cost,” says Katherine Steel, an MIT-trained engineer who heads the World Bank’s Lighting Africa program. If replacement batteries are not in the budget, the effective lifetime of the microgrid is limited to only a few years. According to OPS, lead-acid batteries keep the price of microgrids relatively high not only because they need to be replaced frequently but because they are so expensive that microgrid designers lean heavily on diesel generation to provide electricity through the night. It is cheaper to run diesel generators than to add enough solar panels and batteries to provide power around the clock. To overcome this problem, OPS is now testing a battery from Aquion, a Carnegie Mellon University spinout in Pittsburgh; it could nearly eliminate the need for diesel in microgrids, lowering emissions and greatly reducing operating costs.
“Microgrids still use a fair amount of diesel,” says Jay Whitacre, a Carnegie Mellon professor who invented Aquion’s technology. “The next step is to go to a situation where they have a diesel generator present, but they almost never are turned on. Our battery could allow that.” The Aquion batteries work much like the relatively long-lived lithium-ion batteries used in electric cars, which are much more expensive than lead-acid batteries. But the company’s technology uses far cheaper materials and is easier to manufacture, keeping costs competitive with the less durable batteries that are now widely used in microgrids (see “Building Cheap Batteries to Circumvent the Grid”). “Our battery will cost about as much as a high-quality lead-acid battery up front,” he says. “But that lead-acid battery is going to have to be kept cooler, and it’s going to have to be swapped out after a couple of thousand cycles. Ours will go way more than that—two or three times as long.”
The savings from cutting diesel consumption could be significant. The microgrid at Batu Laut is designed to get much of its power from diesel, but a system designed around cheaper batteries might need generators only for emergencies and long stretches of bad weather. Reducing battery costs and diesel consumption could lower the cost per kilowatt-hour from a dollar to as little as 40 cents. Yet even that is higher than the price of electricity from the grid. The Malaysian government subsidizes microgrid electricity so that villagers pay something comparable to city rates, but it can’t keep doing that forever, in part because with each additional kilowatt-hour villagers consume, the cost of the subsidies goes up. In poorer countries like India, the high cost of microgrid power could be an even bigger obstacle to widespread deployment. “For microgrids to be a leapfrogging technology like cell phones, they would have to offer equivalent or superior service to the grid at a lower cost,” Steel says. “But I think that’s a transition that still needs to take place, and I wouldn’t say that’s immediately around the corner.”
A more likely scenario is that microgrids and the conventional grid will complement each other. As the conventional grid expands from cities and as improved roads make communities less remote, extending the grid to them will make more economic sense. Where microgrids exist, many will eventually be absorbed into the larger power grid. At times of peak demand, utilities can call on electricity stored in microgrids’ batteries or use their diesel generators to provide a boost of power. If this happens, hybrid microgrids will make the existing grid far more resilient. Indeed, as battery costs decline, microgrids are an increasingly attractive option in cities where conventional grid power is unreliable; they could ensure that factories and other users have a dependable source of electricity.
These types of large infrastructure changes will take years and require significant investments. Meanwhile, though, microgrids have already begun to make a difference to some lives. Back at Batu Laut, the system continues to hum quietly along, and villagers are getting new ideas about how to use the electricity. One woman has acquired an embroidery machine and hopes to sell customized uniforms. The head of the village’s development committee is lobbying for a government grant to build a food-processing factory that would run on power from the microgrid. And now that the village has reliable electricity, the teachers for the local school are moving out of the city on the mainland to live on the island.
Can Microgrids Bring Low-Carbon Power to Tens of Millions of People?
by David Ferris / January 21, 2014
Bharath Kumar was furious that the lights went out an hour early. His candy-making operation in the village of Tamkuha, in northern India, had been plunged into darkness at mid-batch, forcing him to use a weak, battery-powered lantern to manage his boiling pots. “If I knew that the power would be shut off an hour earlier, I would not have mixed the sugar in the flour,” he fumed. “This is not the first time. I will keep a record of when the power is switched off every night and show this when they come for collections.”
People everywhere complain about the power company, but Kumar’s power company has an unusual challenge. Husk Power provides light bulbs and a small amount of electricity to about 200,000 people in 300 tiny farming villages across the state of Bihar that have never been touched by the electric grid. Each village has a generator powered by burning and gasifying rice husks, a byproduct of farming that is otherwise wasted. The six-year-old company is one of numerous startups that are trying to build carbon-free or low-emissions “microgrids” to light up rural villages across India. The need is enormous. Roughly 300 million Indians living in 80 million households — about a quarter of the country’s population of 1.2 billion — do not have access to electricity. According to the World Bank, per capita electricity consumption in India, centered mainly in cities and towns, is 684 kilowatt hours — just 1/20th of the United States’ per capita consumption of 13,246 kilowatt hours.
Nearly all microgrids in India are powered by solar photovoltaic panels, with the exception of 20 to 30 networks that run on hydropower in the states of Karnataka and Uttarakhand and the biomass-powered grids operated by Husk. To date, microgrids provide just a tiny fraction of India’s overall power needs. Although no comprehensive statistics exist on the number of microgrids, a conservative count shows that they serve at least 125,000 households in India, divided mostly between large, government-sponsored projects in the North Indian states of Chhattisgarh and West Bengal and private ventures centered on Uttar Pradesh and Bihar. Uttar Pradesh and Bihar are among the most rural and least electrified states in India — a countryside packed with tens of millions of people, united by darkness.
India’s Ministry of New and Renewable Energy, through its National Solar Mission, has set the highly ambitious goal of replacing kerosene lamps with 20 million solar lighting systems — powered by microgrids, solar panels on individual homes, or solar lanterns — by 2022. The microgrid sector is dominated by smaller enterprises like the four I visited in India: Mera Gao Power, Naturetech Infrastructure, Minda NexGenTech, and Husk. Most microgrid entrepreneurs hope their trajectory will follow that of the mobile-phone industry, which starting in the late 1990s transformed life in the countryside by bypassing land lines and enabling villagers to communicate with the outside world. The goal with microgrids is to bypass altogether India’s inadequate power system and troubled grid. “We argue that that villages and remote hamlets that are off the main grid can leapfrog into sustainable power access via solar PV (photovoltaic) mini-grids as a long-term solution rather than as a stop-gap ’till the time the grid comes,'” says a report on solar microgrids written by the Observers Research Foundation of Mumbai. “An Energy Revolution akin to the Green Revolution in Agriculture in the ’70s needs to be brought about.”
Microgrid companies like Mera Gao Power offer a modest and rapidly installed infrastructure, serving as few as 20 customers from a small set of solar panels that often produce only a few kilowatts. One day in a village in Uttar Pradesh I saw how easy it is to install a microgrid. A team of four workers from Mera Gao strung lights to about 40 households. They attached the cables along house eaves and through the trees. (In other towns, installers use the abandoned poles of failed government power projects.) With the addition of two solar panels and a bank of lead-acid batteries, the system was good to go. Mera Gao’s customers pay about 100 rupees — $1.60 — and receive enough electricity to power two LED lights and a mobile phone charger for seven hours a night. Husk can supply about 400 households from one of its rice husk gasifiers. Two stories tall and painted green, the gasifiers are usually situated near the center of town, next to a giant pile of rice husks and surrounded by a rickety fence. Also for 100 rupees, a Husk user gets two CFL light bulbs and a cellphone charger, along with a power cable that supplies electricity for five hours a night.
The potential market for microgrids is huge, and the prospect of so many customers has made microgrids primarily a private-sector and profit-motivated enterprise. The leaders include small startups hoping to do social good, a multinational solar power company, and veterans of the cellphone industry. A report by the World Resources Institute and the Center for Development Finance estimates that the market for microgrids in India and other clean energy consumer products could reach $2.1 billion annually. These startups’ prospects might be extinguished in a moment if regular power lines marched into the villages. But the electrical grid in India is already overtaxed; an estimated 25 percent of India’s power generation capacity is underutilized because of fuel shortages and other problems. The main supplier of power in India — the coal industry — also is hobbled by deep structural problems and the growing reluctance of international funders to build new coal plants.
By illuminating an entire village at once, a microgrid can spread light more quickly than handouts of solar-powered lanterns. It can also scale up far faster than traditional power lines, which are often promised in India but seldom delivered. By deriving their power from biomass or solar panels, microgrids raise the possibility that large regions could stay off the coal-fired power grid forever, shaving a significant chunk off the world’s future carbon budget. Whoever finds the business model for providing cheap, reliable, local power will help pull 300 million Indians from the 19th century into the 21st century, with vastly expanded opportunities for education and commerce.
Debajit Palit runs the rural lighting program for The Energy and Resources Institute in New Delhi, a nonprofit that has provided thousands of solar lanterns to some villages and built microgrids for about 160 others. He sees the microgrid occupying a unique niche in India’s power system. In general, electrical service from a solar-powered microgrid costs the equivalent of 50 cents per week, or four to five times more expensive than grid electricity, which is heavily subsidized. On the other hand, it is far cheaper than a solar lantern, which might cost a villager more than $30 to buy — and then might break. Palit projects that the microgrid and the regular power grid might one day converge on the same village and compliment each other, making the village’s power supply cleaner and more robust. As I saw during a recent tour of a dozen villages, however, building a thousand grids of light won’t be easy. Until Husk arrived five years ago, Kumar and his fellow villagers had never seen a power company. Their lighting options were kerosene lanterns, which produce feeble light and pollute a home’s air, or diesel-fired generators, which are expensive and getting pricier to run as the government pulls back on fuel subsidies. Charging a cellphone often required taking a trip to a bigger village.
Microgrid installation may be easy, but that is often where the simplicity ends. Some high-caste farmers demand that lines be rerouted because they can’t bear to have electricity flowing from the house of the low-caste cobbler next door. Some Hindu neighborhoods don’t want to be on the same grid as Muslims. One resident who breaks the rules and takes too much power, for a ceiling fan or television, can make the whole grid crash. Then there is the raw frontier of renewable energy. The North Indian winter can offer a month of nonstop gray skies, which is a problem for solar systems that need three hours of sunlight to store enough energy for the night. Husk Power’s demand for rice husks — once not even useful for cow fodder — has started to drive up the price, forcing the company to hunt for corncobs or river grasses that have even less market value. But the biggest difficulty by far is getting paid. India’s farmers have irregular incomes and aren’t used to monthly bills. In tiny hamlets, forgiving one person’s debt means that next month no one will pay. This has forced microgrid entrepreneurs, many of whom got in the business for social good, into uncomfortable new roles as debt collectors. In response they have sought out new models that assure payment, from installing meters that dole out electricity in chunks like a prepaid cellphone, or hiring local franchisees who can use their stature to bring deadbeats into line. Finally, there is the fact that some rural Indians, like Kumar the candymaker, are not necessarily impressed by the deal they get. “It is good, but the power is shut down at 10 p.m.,” said a doctor named Mustakim in the Uttar Pradesh town of Attadhani. “The patient’s illness does not know this time. I need something that gives me light when I need it.”
However, many of these new electricity customers told me their lives had turned immediately for the better. In Attadhani, one shopkeeper told me sales were up at his kiosk because customers could actually see his merchandise. Meanwhile, the wares at a competitor’s stall a hundred yards away were barely discernible in the dim glow of a kerosene lantern. A teacher and village doctor in Purva Ghat, a tiny township in Uttar Pradesh, said his patients complain less of coughs now that they’re not burning kerosene, and that the children get more homework done because the parents aren’t worried about lantern fuel running out. And in the village of Muglinkuha, I was led into a dark room where women knelt over a purple sari glowing under the beam of LEDs. The women were gluing jewels onto the fabric’s printed pattern, work they previously couldn’t do at night because the lanterns were too dim.
For now the microgrids have their circuits full providing only a few watts for light bulbs and cellphone charging. But, just like their cousins in the cities, rural customers will inevitably want more electricity to power refrigerators, fans, TVs, and other energy-draining appliances. It remains to be seen if solar- and biomass-powered microgrids will eventually become robust enough to give it to them. “They want light, they want fans, they want TVs,” said Padu S. Padmanaban, an energy adviser with the U.S. Agency for International Development in New Delhi and program director of the South Asia Regional Energy Initiative. “They want a [light] switch.”
Along with building an impressive piece of public art and powering the irrigation system at Edible Futures, Demand Energy Equality is testing research into whether setting up solar-panel surfaces at different angles at higher altitudes – like leaves – works better than setting up a flat line of optimal-angle panels.
Energy crowdfunding platforms are gearing up for 2013
by J Lester / December 4, 2012
When President Obama signed the Jumpstart Our Business Startups Act (the JOBS Act), many in the renewable energy business took notice. The law is designed to solve the major problem of financing small-scale business ventures, which could include community-based renewable energy projects. The JOBS Act may finally allow millions of regular investors to make a modest return by crowdfunding local renewable energy projects and start-up companies. Many believe crowdfunding may be the solution to the financial problems many renewable energy projects face today. These projects are often delayed or put on indefinite hold because they are unable to acquire the capital financing they need over the life of the project. Through new crowdfunding platforms, consumers are able to invest into such projects and receive something in return. Before the JOBS Act, the return was usually just peace of mind knowing that you had invested in a renewable energy project. Now, it may be possible in the US to earn a return on an investment through equity or debt. There are already platforms up and running in the UK for such projects. Crowdfunding empowers individuals to exercise their collective financial power to support the people, companies, technologies, and projects that they believe in. Almost $1.5 Billion was raised through crowdfunding in 2011 and according to Crowdsourcing.com, will most likely double that in 2012. Crowdfunding for renewable energy, particularly solar, has distinct advantages. Such loans are backed by a revenue-producing asset, and counter-parties are paying for a service (electricity) they already pay for. This reduces the risk to investors because counter-parties are less likely to default since they save money from day one.
The following is a non-comprehensive list of energy crowdfunding platforms that service companies, entrepreneurs and investors in the US and across the globe. Let us know if you are aware of other crowdfunding platforms that are either focused or have a significant presence in cleantech and renewable energy. Please email: jlester[at]cleantechfinance.net.
Solar Mosaic has said it wants to be the “Kickstarter for solar”, enabling people to invest their own money into solar energy projects large and small. In Solar Mosaic’s case, once he rules surrounding equity crowdfunding are written, investors will earn a return from each project’s eventual revenue. Solar Mosaic thus far has raised nearly $400,000 from over 400 investors to finance six solar power plants. Together, Mosaic’s first six projects created 120 kW of clean solar energy in California and Arizona, produced 2,350 job hours and will save community organizations an estimated $438,000 on their utility bills over the next 20 years. Solar Mosaic recently received $2.5 million in Series A funding. The round was led by Spring Ventures with the participation of Serious Change, Jim Sandler, Steve Wolf, Tom Chi, and a group of angels from the “Toniic” investor network. The company says it will use the new funding to build out its platform for crowdfunding on a larger scale. Daniel Rosen, co-founder of Solar Mosaic stated, “solar loans are backed by a revenue-producing asset (electricity) and the building owners are just continuing to pay for the electricity that they are used to paying for day in and day out. There is little risk to investors that the building’s owners will default on their electricity payments, particularly since they are also saving money on their energy bills from day one. In addition the costs, timelines and returns for solar panels are pretty transparent as the technology has become increasingly commoditized.” On April 24th, Solar Mosaic filed with the Securities and Exchange Commission and several states to offer Solar Power Notes to the public, with proceeds going to fund solar power projects. They are now in what is called a Quiet Period, which is from the time a company files a registration statement with the SEC until SEC staff declare the registration statement “effective.” During that period, the federal securities laws limit what information a company and related parties can release to the public.
SunFunder is a crowdfunding similar to Solar Mosaic with a more international,developing economy focus. SunFunder has developed strong partnerships with solar energy businesses around the world. These businesses provide affordable solar energy solutions to underserved communities, but the lack of access to financing prevents them from scaling up. By investing through SunFunder, a prospective investor will provide the financing that will make affordable solar energy available to people around the world. Each solar project featured on the SunFunder platform is a partnership with one of these solar businesses. SunFunder conducts due diligence on each solar partner and works with them to post projects on the platform. Once a project is fully funded, SunFunder facilitates low-cost financing to the solar partner to fund the implementation of the project. During the financing term, as the solar partner receives payments from their customers (typically the people who directly benefit from solar), the partner makes repayments to SunFunder. SunFunder then repays investors, who earn back their principal investment and receive ‘Impact Points’. Both the principal repayment and Impact Points can then be used to reinvest in more projects. Depending upon the final crowdfunding ruling from the SEC and FINRA, SunFunder may become an investment platform that offers additional value to investors beyond the return of principal. Thus far, SunFunder has fully funded a project in the Phillipines which will bring 100 solar powered lamps with mobile phone charging capability to households in the islands of Palawan. This will enable roughly 500 people to gain more productive hours each day to pursue livelihood opportunities, study, and spend meaningful time with their families. A second project in Chadiza, Zambia has funded a loan to purchase and sell approximately 781 solar-powered lights to families, impacting over 3,900 people’s lives. The sales will take place through a solar schools campaign, which provides lighting to students and their families at a discount. Students use their solar lights to study by and to charge mobile phones.
Abundance Generation (UK)
Abundance Generation allows people to invest in renewable energy projects in the UK, such as wind, solar and hydro projects. There are currently one solar and four wind projects in development, with one wind project up and running and already generating energy. Each project open for investment on the Abundance website has a specific estimated return. Users of the Abundance platform purchase debentures – essentially an IOU – and receive a regular cash sum, which is the share of the money made from generating electricity. Users can still invest as little as £5 in a project and are currently receiving an average of 5-9% return on their investment. Abundance Generation’s first project aims to raise between £300,000 and £1,400,000 – each person can pledge between £5 and £50,000– to build a 0.5MW wind turbine at Great Dunkilns Farm in the Forest of Dean. “We call it ‘democratic finance’, says Bruce Davis, co-founder of Abundance Generation. “Enabling small investors, starting at as little as £5, to produce a regular return from the generation and sale of 100% green electricity from wind, solar, hydro and other renewable energy sources.”
CleanCrowd is a crowdfunding platform currently under development. CleanCrowd combines these essential elements into a method to get funded for early and growth stage companies that have a positive environmental impact. They plan on using revenue based lending to provide capital with a flexible repayment plan based on a percentage of generated revenue.
Microgenius is a platform designed to make it easy for people to find and buy community shares in sustainable energy projects in the UK, and also to make it easier for communities to promote and manage their share offers. If a project generates energy from certain sustainable sources, an investor can earn money per kilowatt hour generated from the the feed-in-tariff (FIT) for electricity generation and the renewable heat incentive (RHI) for heat generation. The exact amount is determined by these tariffs at the time of installation and the capacity and type of technology. The target return per year for community energy projects is typically between 3% and 5% gross (excluding tax relief). An investor may also be able to claim Enterprise Investment Scheme (EIS) tax relief too, which will in effect increase your return.
SunnyCrowd is a German platform that labels itself as “the first crowdfunding platform for sustainable energy, in which each with a small amount of renewable energy projects can participate online.” An investor may be able to expect a better ROI on renewable energy projects in Germany than in the US and even the UK, due to the fact that solar and wind power are increasingly the cheapest electricity options thanks to Germany’s aggressive renewable policies.
(The following platforms act more as an entrepreneurial ecosystem that helps start-up business match up with interested investors. Both platforms are focuses on accredited investors such as Angels and VCs, but are monitoring the eventual rules behind crowdfunding for equity and debt.)
OnGreen is a cleantech social marketplace where members from across the globe work together, connecting the best ideas in cleantech to funding and expertise. The OnGreen Deal Marketplace offers a cumulative $2.0 billion in investment opportunity from innovative companies from across the globe. These deals span 256 cleantech sectors and range from small seed rounds to large expansion and project financing rounds. Right now, OnGreen focuses on accredited investors, however the final rulings on crowdfunding could open access to OnGreen’s platform to all investors.
Skipso, similar to OnGreen, is an online platform and business to business marketplace entirely focused on sustainable innovation. Skipso’s virtual ecosystem brings together entrepreneurs, investors, researchers, policymakers, professionals and businesses from the Cleantech across the globe. Skipso allows users to seek solutions to their internal business and technical challenges, access capital to grow their business and commercialize their products and services on a global market. Investors use Skipso to find and fund exciting new ideas and projects from Cleantech innovators around the world.
(The following crowdfunding platforms are solely donation based.)
Green Fundraising is an online platform to support projects that focus on environmental or social responsibility. Entrepreneurs and non-profits can seek funding from the public (referred to as “crowdfunding”) by posting a project on GreenFundraising.org. Entrepreneurs and non-profits can seek crowdfunding from the public by posting a project on GreenFundraising.org. Projects can offer rewards to contributors, but the website isn’t intended for soliciting equity investment. There is no indication that GreenFundraising will change this philosophy if and when the SEC rules come into effect.
GreenUnite is a crowdfunding and educational platform focused on helping to launch important products, technology and content dedicated to creating a more sustainable world. The platform connects individuals and organizations with green supporters in order to create a community that thrives on connections and interconnections that spark meaningful change to educate others on the effects of climate change. In addition to getting an idea crowdfunded or supporting an important project, GreenUnite also provides the option to donate a portion of funds raised to green U.S.-based charities that are personally selected by the project’s creator.
GreenFunder is a global fundraising site for socially responsible projects and businesses. Projects range from simple student field trips to complex green business start-ups. The site is designed to help anyone – entrepreneurs, nonprofits, teachers, kids – get the funding they need. Individuals and organizations can test, market, fund, and sell their projects, products, or events – all risk-free, and retain 100% ownership. Projects are featured as campaigns, each with a funding goal and a deadline. Each campaign offers rewards to their funders – products, experiences, and/or recognition – at different funding levels.
The Green Crowd (Australia)
The Green Crowd is a new crowdfunding site that exclusively supports and funds green and sustainable projects across the entire world.
A hand-made solar lamp from Uganda
by John Timmer / Jan 27 2014
Last week, I got notification that there was a package waiting for me at our corporate headquarters in Times Square. The customs declaration announced that it was a solar-powered lamp. That on its own didn’t surprise me. A variety of organizations have been promoting these as indoor lighting for places that aren’t on the grid, and I’d covered just how significant the health benefits of this lighting can be since it would displace fuels that create lots of indoor air pollution. But opening the package brought a rather unexpected surprise. There was a solar lamp inside, but it wasn’t the sort of thing that I’d expect from a large aid organization. It was clearly made by hand, with rough edges in its white plastic and the On/Off labels stuck on with adhesive. The letter that accompanied it told an interesting tale. Its manufacturer, Simon Lule, was making these himself in a workshop in Kampala, Uganda, selling them for the price of about two months’ worth of kerosene, the fuel of choice in the area. Simon was raising awareness of his work after launching a fundraising campaign hoping to buy some equipment that could injection-mold the plastic. And he was hoping that an article on his work would raise the profile of his campaign.
Masa Energy’s Simon Lule describes his creation
We’ve been able to confirm Lule’s description of the power and lighting situation in Kampala through someone in the US Military who’s stationed there. And, through e-mail and a Skype call, he was able to provide a lot of detail regarding how the hardware came to be and is now produced—details that are consistent with the unit we have and the video he’s produced. Lule told Ars that the whole thing started when he returned home to Uganda from London to visit his grandparents. Although Uganda does have a limited electric grid (it generates most of its power from dams on the Nile River), most of the population doesn’t have access to it. The CIA World Factbook rates the country as 139th of 216 countries in terms of electricity consumption, barely edging out New Caledonia. The organization says that “unreliable power” is holding back Uganda’s economic development. Lule said that only eight percent of the country’s population has access to the electric grid, a figure consistent with other sources we’ve checked. Lule’s grandparents are among the remaining 92 percent and were lighting their house with kerosene. As we learned late last year, burning fuel indoors for lighting and cooking kills more people every year than malaria; Lule put the health impact at the equivalent of two packs a day of cigarettes. He also told us that the fuel costs over a dollar a week—not a small figure, given that Uganda’s average per-capita income is only $1,400. So, his first thought was to buy a solar lamp, one that can charge during the day and provide lighting at night. But when he went searching for a product in Uganda, all the options were expensive and didn’t run long enough to be useful. So, thinking he’d found a way to both do good and supplement his income, Lule looked into whether he could import them from China. But again, none of the options would actually work well due to either cost or performance.
So, Lule did something that most of us wouldn’t consider: he figured out what it would take to build his own. When we asked him whether he had any background in electrical engineering, he laughed and said “My degree was in digital media, which is basically creating media for the Internet. I would have worked in advertising—that’s the correct field.” But he managed to teach himself what he needed through an unexpected source: YouTube. There, he found videos on basic electronics from well-known sources like Make Magazine and some more obscure ones like the Afrotechmods channel. With that information in hand, he set out designing his light, finding a contractor in China to manufacture the resulting circuit board. For batteries, Lule simply chose three AA NiMH rechargeable, which are typically good for 12 hours of lighting. Those are expensive in Uganda at the moment but relatively cheap to import since they’re mature technology. He estimates they’ll be good for two years of use; by the time that’s up, he hopes to be able to sell replacements to his customers. There’s also nothing special about the LED itself or the solar cells. “I found people online, and I basically gave them the specifications, and they made the solar panels,” Lule told Ars. “I’ve discovered that, if I buy just the solar cells and make the solar panels myself, I’ll be able to save $0.80.”
The housing turned out to be the real challenge. The stand is a simple, bent piece of metal that’s easy for Lule to make (he contracts someone to cut the metal the right length, then bends it by hand). But the plastic has been the real hassle. “In the beginning, I thought plastic was a bit like candle work—if you melt it, it can flow like water so you can pour it into a mold,” Lule said. “When I got here, I tried it and plastic, when you melt it, it remains viscous. It’s a bit like jelly.” The molds for the plastic presented their own challenge. “There are machinists in Uganda who can do basic molds, so I did that with hard aluminum,” he told Ars. “But the problem with that is that you can’t take the plastic out once it’s not melted. If you look at my tools, they’re all flexible. When the plastic cools down, they flex a little bit, and I can slide the plastic out.” Once the pieces are out of the mold, excess plastic is shaved off by hand, and panels are sealed together by heating them on a hotplate.
Unfortunately, he’s the only one who can seem to do so without breaking the metal molding, which puts a severe limit on the number of lamps he can manufacture a day. Currently, that number stands at three, which is why Lule is so interested in obtaining the hardware he needs to mass produce these things—though he may still have to get the pieces to stick together by partially melting them on a hot plate. Despite all the labor involved, Lule is able to sell these at $12 each. He estimates that this is about the cost of two months of kerosene for fuel lamps. At the moment, he’s selling all that he can manufacture, often needing to tell people their orders will take a few days to be made. All of the lanterns are being sold in Kampala as well. Although the city is served by a grid, uneven development and the high cost of power have left many of its residents relying on lanterns to light their homes.
Although not exactly polished, the light itself looks reasonably good. It’s compact and fairly lightweight, and it clearly doesn’t need an owner’s manual. Its lone control—a switch—is labeled. It’s fairly lightweight, though I wouldn’t carry it on a backpacking trip. But the key thing is that it works. I’m using it in the middle of winter in New York City, where the weather’s been on the cloudy side of nice for most of the time I’ve had it. So far, this hasn’t run the batteries down, and Lule said that they’ll probably be enough to provide three evenings’ worth of light if they’re fully charged, so one good day may be enough for a while.