Sunday, August 31, 2008

Renewable Energy at the Base of the Pyramid

I recently had lunch with a couple of former co-workers who were interested in talking about my goal to help 1 million people out of $1-a-day poverty. One of them asked about my plans to incorporate environmentalism into my approach. I admitted I hadn't thought much about it, but that it was a secondary consideration for me. I told her I generally subscribed to the idea of "first, let's figure out how to help them make money, and then, let's figure out how to do it in an environmentally friendly way." Clearly, she was disappointed with that answer. As we continued to talk, China came to mind, given that it recently hosted the Olympics. I asserted that in the case of China, the environment needed to have been a consideration long ago, and that air quality today is unacceptable as a result of the "income first, environment second" approach.

On Friday I researched renewable energy sources, referring primarily to the US Department of Energy's website. Below is a chart I developed to summarize my findings from a Base of the Pyramid (BoP) perspective:
Hydropower and geothermal power do not appear to be good options for BoP markets, because neither of them appears to be well suited to scale down to rural villages. Furthermore, hydropower has negative consequences on the environment and on farming. Since 70-80% of those living on less than $1-a-day make their living through farming, hydropower is not a good option for them.

Biomass, solar, and wind power all appear to be reasonable options for BoP markets. Converting biomass to energy is done using processes similar to that of coal and other fossil fuels, and the processes cause some pollution, albeit less than fossil fuels. I therefore consider wind and solar to be the preferred renewable energy sources, based on my limited knowledge. The big down-side of solar is that it's currently an expensive way of generating energy as compared with other alternatives.

A startup based in Fort Collins, Colorado is attempting to make cost less of an issue for adoption of solar energy. AVA Solar claims that $1 per watt is achievable; if achieved, solar energy costs could drop by a factor of three or more. AVA Solar completed a $104 million equity financing round August 29, 2008, and the company plans to ramp up production in 2009. The company's values also mesh with mine. The following quote is from AVA Solar's website:

“We recognize that more than two billion people on this planet have little or no access to electricity, and we have seen firsthand the hardships that this can cause…Over time, we are committed to doing our part to improve the lives of those less fortunate, especially where our technology can provide part of the solution. As we grow and mature as a company, we will continue to partner with other organizations to bring clean energy to those most in need.”

I need to contact the folks at AVA Solar and learn more about their work, as well as the work of others in the renewable energy space. I appreciate my friend's push back on the "income first, environment second" approach and plan to learn more renewable energy and ways to incorporate it as I help the world's poor to increase their incomes.

3 comments:

Robert Katz said...

Ryan,

This is good stuff - from your conversation to your table to your discovery of AVA Solar. Just a few thoughts to continue the thread:

- Don't forget about E+Co, an investor in small scale energy projects targeting low-income populations
- Ditto New Ventures, a project that identifies promising environmental SMEs that often improve the lives of low-income individuals.

On the larger question of which is first - income vs. environment - you're opening a huge but interesting can of worms here. There's no right answer, other than to say that you can't have sustainable economic development without long-term environmental sustainability and vice versa. Tough nut to crack.

Great post! Thanks again.

Paul said...

Ryan-
I know the founders at AVA. Let's chat a bit when you visit my class on Monday.
Glad to see you getting interested in energy/environment issues for BOP.
Paul

chou said...

Interesting--I hadn't really thought about this aspect before.