Even as the world has become wealthier, an estimated 1.5 billion of our neighbors on this planet live without access to electricity. Think, for a moment, about what your life would be like for even a single day without an on-off switch, and you will grasp the problem that E + Co and its chief executive, Christine Eibs Singer, are trying to solve.
E + Co is a nonprofit investment fund that finances and supports clean-energy entrepreneurs in the developing world. It’s been around since the early 1990s, and currently operates in Asia, Africa and Latin America. It invests relatively small amounts of money — $125,000 to $1 million per company, $7.3 million in all in 2009 — but it has had an out-sized impact, by backing companies that brought cleaner energy to about 6.2 million poor people in the last decade.
Of course, that’s not nearly enough given the scale of what’s sometimes called “energy poverty.”
“You can’t have economic development without energy,” Christine says. “They’re connected.”
But–and here’s the encouraging news–the experience of E + Co suggests that efforts to deliver clean energy to the poor have the potential to be scaled up, big time. Distributed, small-scale renewable energy technology is getting cheaper. Small and mid-sized companies, it turns out, can make money selling solar panels or cleaner cooking fuels. Few things will drive change faster than a vast, untapped market that can be profitably served by entrepreneurs.
I met Christine this week in Abu Dhabi, where she was a finalist for the Zayed Future Energy Prize. She was awarded $350,000–not bad–as a runner-up. (The Danish wind power giant Tesla won the big prize, and its CEO promptly gave it away.) During her visit to the World Future Energy Summit, Christine was seeking investors, donors and partners to help E + Co train would-be entrepreneurs.
Based in Bloomfield, N.J., E + Co employs 48 people, most deployed in offices in China, Costa Rica, The Netherlands, South Africa, Tanzania and Thailand. Like a for-profit venture capital fund, E + Co offers advice and hand-holding as well as capital to its portfolio companies. “We work closely with our entrepreneurs to help them develop a viable business strategy that either E & Co or others can invest in,” Christine says. It raises money from foundations, governments and multinational institutions like the International Finance Corp. and the Inter-American Development Bank.
E + Co invests in companies that provide solar power, biogas, small-scale hydro, fuel-efficient cooking stoves and event LPG (the gas used in grills in the U.S.) when it serves as a replacement for dirtier fuels like wood or charcoal.
“We’re technology neutral,” Christine says. “It has to be cleaner. It needs to be available—we don’t take technology risks. It has to be appropriate–we don’t overdesign. And it has to be affordable, either to the household or the utility.”
Most of the companies backed by E + Co start small, but some have demonstrated impressive growth. For example:
SELCO India, which needed five years to sell its first 500 solar systems for the home, has sold 140,000 solar home lighting systems in the past 15 years. Their customers typically borrow money to buy the panels from microfinance institutions The CEO, Harish Hande, won an Ashden Award for Sustainable Energy, a green energy prize.
Toyola Energy of Ghana produces full-efficient cookstoves and sells them in Ghana, Togo and Burkina Faso. E + Co gave the founding enterpreneur, Siraj Wahab, a $75,ooo loan and more recently helped him develop a new revenue stream: carbon credits, because the cook stoves reduce CO2 emissions. The carbon credits are aggregated by an E + Co business unit devoted to carbon finance, verified by third parties and then sold to Goldman Sachs. They become voluntary carbon offsets, which are bought by people or companies who want to reduce their carbon footprint.
Nicaragua-based Tecnosol installed more than 50,000 solar systems in a country where more than 75% of people in the countryside lack electricity. The firm has had three rounds of financing from E + Co, including a $1 million loan in 2007. In an encouraging sign, a private equity fund called the Central American Small Enterprise Investment Fund invested $1.15 million for a 35% stake in the company.
None of E + Co’s have gone public yet, but most are doing well, Christine told me. The fund has a 92% success rate, meaning that it writes off about 8% of its investments. Its return on investment, after the write-offs but before transaction costs, was a cumulative 8.7% between 1998 and 2009–not enough to satisfy a strictly bottom-line investor but not bad, given the social and environmental returns.
“We’ve proven the model,” Christine says. “It works.”
Photo credits: E+Co, Stephen McGee for Toyola Energy (boy with cookstove)