Synergy Network Proposal
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Synergy Network Proposal

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This talk introduced an idea to marry social media, micro-finance, portable renewable energy and information communications technology to create a global workforce of clean economic developers for the ...

This talk introduced an idea to marry social media, micro-finance, portable renewable energy and information communications technology to create a global workforce of clean economic developers for the 1.5 billion poeple with no access to electricity. The idea is that this new workforce would be young women entrepreneurs, seeded with financial resources from women with greater access. Warren Buffet made billions by investing in “under-valued” assets and then waiting for the rest of us to catch up. Young women in the developing world are the biggest under-valued asset the world has seen in some time.

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    Synergy Network Proposal Synergy Network Proposal Presentation Transcript

    • Death By A Thousand Paper-cuts: A Proposal for a Viral Revolution in Market Making for New Energy in the Developing World Alison Wise May 4, 2010 NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC
    • Building the Global Clean Economy “At Speed and Scale” A Proposal for Micro-Economic Tools and Mobile Technology Infrastructure for Clean Economic Development National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 2 commentary • This is an alternate way of introducing the concept I’ll talk about today. ―Speed and scale‖ is a very important context for our discussion. From a very ―30,000‖ foot perspective, the ―synergy‖ in question today 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 the space I’ll be talking about today. 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 time we have. 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 initiation of this particular proposal 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 ICT devices. Mo Ibrahim said in a conversation with Charlie Rose that ―mobile devices brought the possibility of civil society to Africa…‖ Taking that a step further, ICT and portable renewable energy and the ―mobile Wal-mart‖ concept of appropriate technology distribution, again using mobile devices, aligns many different governance and humanitarian concepts together, with a decidedly market driven approach: National Renewable Energy Laboratory Innovation for Our Energy Future
    • Agenda & Objectives Introduction of the Synergy Network: To rapidly accelerate the development of clean economies in rural areas of the ―developing‖ world  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  To monetize the transactions in this new economic system so that wealth is both generated and distributed in a ―viral‖ manner National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 4 commentary Most basic concept: 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 BOP clean energy entrepreneurs. Key differentiation is our definition of BOP entrepreneurs as clean economic developers themselves by bundling clean energy generation services, micro-finance services and CT distribution services These objectives are my impression of what we should be focusing on in terms of outcomes, but they are up for discussion. Indeed, I will ask this forum to be ―listening actively‖ as the goal of my discussion today is to begin down the path of a road map towards implementation and I’m going to be looking for partners in this— 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 National Renewable Energy Laboratory Innovation for Our Energy Future
    • Insight & Access Opportunity Need National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 6 commentary • 1) the opportunity and 2) the need and 3) the friction/gap/wall between the two. •Broadly: Harness the power of networks to align financial resources and human insights with clean economic development, putting the power of a network approach in the field for a viral penetration strategy…leveraging ICT for impact •Social Entrepreneurs version. 1.0 •NEED  driving 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. 5% efficiency is plenty if it gets the job done for 1/100 of the price.  Paul Polak and his book Out of Poverty, ―boots on the ground‖ viewpoint. ..convinced that if you can create business opportunities for entrepreneurs that cost no more than $1100 (landed total), MF 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. Near term..okay BUT 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. • Academic rigor would be to measure and compare impact from small projects, and figure out where to invest. The Gates’ did this with malaria and treated nets; Wilson’s work with cookstoves and lung health; IDE and water management. What is the best ROI for an affordable solar energy production solution in the BOP? This is a Design for the Other 90% question… •Silicon Valley: •Need: Access to financing, in a value chain whose participants are all boxed out of systems that can't support them given assumptions of risk and value propositions •Opportunity: Flow of insight from information coming from first hand, on-the-ground intelligence to "inventor/entrepreneur in the garage" for specs in terms of the engineering of low-tech/energy efficient/innovative solutions for BOP market need • •Value proposition: friction between inventors in organizations that can't foster external IP in ―under-valued‖ markets and lack of good feedback from potential applications •Madison Avenue: Hearts-and-minds, see SolarVision.org •Wall Street/Corporate America: Corporate sponsorship for hybrid philanthropy to gain BOP market intelligence Need: Better intelligence about new market and “workforce,” Opportunity: brand identity with mission driven SE approach, real value in BOP feedback. •Global Governance/Humanitarian: More direct link between people for information, ideas and financial flows National Renewable Energy Laboratory Innovation for Our Energy Future
    • The Synergy Network Social Micro Entrepreneurial Investments Fund Mobile communications Dividends Back Micro- for micro- to Micro- Utilities/Micro- investments and Investors Lenders micro-lending Portable Recipients of renewable energy Synergy Power generation & and Loans social entrepreneurship Bottom-of-the- Pyramid Clean Economic Development National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 8 commentary ―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.‖ First graphic: 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: (virtuous cycle in every sense of the word) •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 (more on this in a moment). •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. Again, more on this in a moment. •3) Aggregated micro-investments are distributed through the SE Fund to SME’s that are aligning micro-finance with renewable energy generation. 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 Comment from a conversation I had…‖This is ―marrying up‖ the distribution channels for clean energy development and community finance…‖ National Renewable Energy Laboratory Innovation for Our Energy Future
    • Background National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 10 commentary At the Tallberg Forum in 2008, I was part of the working group looking at how renewables could positively impact climate change. As context, in our 5 person team, Gerhard deVries was responsible for reporting back to the larger conference audience on large scale RE approaches (he is one of the co-founders of the DESERTEC project). I was responsible for reporting back on small scale/distributed RE approaches National Renewable Energy Laboratory Innovation for Our Energy Future
    • Why the developing world? National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 12 commentary The US carbon footprint dominates the global impact of human activity on climate change, so some think that the real focus should be on the US cleaning up our own act in clean economic development acceleration. But developing nations aspire to achieve much of our lifestyle; if they were to realize that type of quality of life with existing technologies (or worse, the most polluting forms of those technologies since currently many are also the least expensive) the exponential negative carbon impact could drastically accelerate GHG emissions thus reversing any or all positive steps other nation-states may have achieved. The real reason is that energy efficiency is already done. Use the cell phone to land lines example. Less committed to existing infrastructure This is a market opportunity regardless of C02 National Renewable Energy Laboratory Innovation for Our Energy Future
    • Synergy Network Proposal BOP as Workforce/Entrepreneurs in Clean Economic Development  What is the current micro-economic tool box & what does the current landscape look like?  What is the current portable renewable landscape?  What is the current social investor landscape?  What is the current mobile giving landscape? What is the current ―appropriate technology‖ landscape? Where do we already see synergy? National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 14 commentary I’ve just begun to tackle the answers to these questions, and the presentation today is based on what I’ve gathered so far, but this effort is ongoing 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 Current global population with no access to electricity= 1,456,000 people  1.5 Billion people National Renewable Energy Laboratory Innovation for Our Energy Future
    • Synergy Network Social Micro Entrepreneurial Investments Fund Dividends Back Micro- to Micro- Utilities/Micro- BOP as Investors Lenders ED entity Recipients of Synergy Power and Loans National Renewable Energy Laboratory Innovation for Our Energy Future
    • Vision for BOP as Network of Entrepreneurs  BOP as workforce  New conception of ―head of household‖ Win-win: Better quality of life through sustainable opportunity, investment has return  Mobile networks= ICT for infrastructure National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 17 commentary •BOP as workforce, not market for consumer goods  New conception of ―head of household‖  As BOP entrepreneurs, economic value to global infrastructure is win-win: Better quality of life through sustainable opportunity, investment has return •Entrepreneur= working for yourself, not recipient of donations or ―target market‖ for consumption •Mobile networks= can ―tax‖ transactions electronically so quality of life benefits are monetized and fluid •BOP Markets are quantified to represent $36 B dollars by some accounts, or $15 trillion by others. Much of the criticism about a BOP approach to economic development has been levied by assessments that 1) Narrowly restrict economic opportunities to those of purchase of consumable goods and 2) Rely heavily on defining these BOP consumer behaviors based on a ―head of household‖ surveys that misrepresent different behaviors of different genders (e.g. the notion that households living on $2/day spend a disproportionate % of that income on alcohol, television and cigarettes) •Aside: a couple of people I talked with just didn’t understand why mobile technology in terms of financial transactions was important at the BOP. I think the disconnect for them may have been that I wasn’t adequately framing these BOP in the right context, i.e. not a ―market‖ but as a ―workforce‖ National Renewable Energy Laboratory Innovation for Our Energy Future
    • BOP Entrepreneur Model Micro-loans Portable to community renewable (mobile bank) power (micro ESCO) Distributor of clean tech (mobile Wal- Mart) BOP Clean Economic Development National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 19 commentary Components of a healthy economic system : clean energy powering clean technologies facilitated by services that are ―owned‖ by the community Aside: many conversations with social entrepreneurs brought up inherent dis-incentives for truly ―triple-bottom- line‖ metrics…economic, environmental and social. For example, developers of renewable community power in the current landscape were described as being largely ―big players‖ who dominate the field and don’t prioritize the economic benefits to those communities in which projects are being built National Renewable Energy Laboratory Innovation for Our Energy Future
    • Vision for Value Chain- Why mobile technology? National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 21 commentary •Again, immediacy of access to decision of micro-investor for financial •Mobile renewable generation allows fluidity of power distribution to community leap-frogging infrastructure (Debate: Stationary renewables benefit to communities?) •GIS and visualization tools for tracking field operations of BOP entrepreneurs • Again, electronic financial transactions allow for 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) •To answer questions about the availability of wireless communications in the developing world as a necessary component of the Synergy Network, describe briefly work that Fab Labs is doing ―to create elements of a communications infrastructure in developing countries: http://fabfi.fablab.af/ In this case, parabolic reflectors are built from locally available materials (USAID oil cans in some cases) and boost the capabilities of off-the-shelf access points to create long links in a wireless mesh. We're taking this 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).‖ National Renewable Energy Laboratory Innovation for Our Energy Future
    • Vision for Value Chain- Why mobile technology? The ―text‖ donations are highlighted, aligned with organizational mapping, as well as uploaded YouTube videos for sharing of experience National Renewable Energy Laboratory Innovation for Our Energy Future
    • Innovation in BOP PPA? National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 24 commentary Innovation for micro-PPA…BOP social entrepreneur could enter PPA from provider of portable RE technology when bundled with micro-lending to fellow community members, represents economic development base National Renewable Energy Laboratory Innovation for Our Energy Future
    • Portable Renewables National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 26 commentary I am going to focus on solar today, but there are other portables in this space including micro-wind generation that could, for example, be bundled with existing trucking fleets in places like India and Asia. And again, there are community scale stationary renewable power plants that are at an early stage in their industry as well. National Renewable Energy Laboratory Innovation for Our Energy Future
    • Why Innovation in Finance is Necessary: Portable Renewables LCOE Q4 2009 ($/kWh): Marine - Wave Marine - Tidal PV - c-Si PV - Thin Film PV - c-Si Tracking STEG - Parabolic Trough + Storage STEG - Parabolic Trough Wind - Offshore Biomass - Anaerobic Digestion Biomass - Gasification Biomass - Incineration Wind - Onshore Landfill Gas Municipal Solid Waste Geothermal - Binary Plant Geothermal - Flash Plant Natural Gas CCGT Coal Fired 0 50 100 150 200 250 300 350 400 LCOE Carbon: 21 USD Carbon: NEF Estimates Central Scenario Source: Bloomberg New Energy Finance National Renewable Energy Laboratory Innovation for Our Energy Future
    • Renewables Near Term Potential Source: Kurtz 2009 Thin-film organic cells are now approaching 8% efficiency, with prospects for inexpensive manufacturing at scale. These new materials will compete with CdTe (cadmium telluride) and CIGS (copper indium gallium selenide) thin films, which are commercial today and gaining economies-of-scale advantages National Renewable Energy Laboratory Innovation for Our Energy Future
    • Renewables Longer Term Potential “Theoretical calculations of electrical conversion efficiencies up to 80% may be possible……” National Renewable Energy Laboratory Innovation for Our Energy Future
    • Synergy Network Social Micro Entrepreneurial Investments Fund Dividends Back Micro- to Micro- Utilities/Micro- Investors Lenders Recipients of Synergy Power and Loans Economic development “base” National Renewable Energy Laboratory Innovation for Our Energy Future
    • Micro-loans to Community National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 32 commentary •Bundling micro-finance to community members with renewable energy generation •Current micro-finance landscape: •According to the Consultative Group to Assist the Poor (CGAP), in 2007 the total estimated number of microfinance customers was $100 million. Microfinance clients are predominantly engaged in income-generating activities in the informal economy in emerging countries, as a means to self-reliance in the face of high, systemic unemployment. They are street and market vendors, small-scale farmers, cottage industry participants such as weavers, and in some cases medium-enterprise business owners not eligible for loans from mainstream banks. Globally, clients number over 100 million including both borrowers and savers. Many MFIs target women borrowers since research shows that they devote a larger percentage of income to improving the family’s dwelling, nutrition and health care, and to keeping children in school. •Microborrowers may access loans either through a group lending model or through individual loans. In the first instance, the joint liability of all group members to repay a defaulted loan provides ―moral collateral‖ in the absence of a material guarantee. This solidarity system has proven extremely successful in generating high loan repayment rates. Loans can be as small as $100 per borrower (higher in dollarized economies), tenors are short (six to 18 months) and loan repayments rates are 95-98% across the industry. Under the individual loan model, the borrower has sole liability and provides some type of collateral. Such borrowers usually manage more stable microenterprises and may be creating jobs for others in the community, an important social benefit. However, repayment rates in this lending model are lower at 80-90%. •Microfinance lending has high operating costs which are covered by elevated interest rates. These vary according to country and effective rates can top 100% in some markets, but the average is around 30% on an annualized basis. While astronomical by mainstream lending standards, MFI rates are cheaper than those offered by informal moneylenders, which can reach 30% per month. Borrowers are able repay MFI loans because the incremental income from a small amount of capital in their labor-intensive businesses outpaces the interest burden. National Renewable Energy Laboratory Innovation for Our Energy Future
    • Distribution of Clean Technologies The mobile ―Wal-mart‖ approach…catalogue of CT (see PowerMundo, etc.) available for purchase by community (solar cookstoves, solar water purifiers, etc). Partnership opportunity here for folks working on the digital divide, so look to marrying the power/banking service with education for community. National Renewable Energy Laboratory Innovation for Our Energy Future
    • Synergy Network Social Micro Entrepreneurial Investments Fund Leverage Social Media Dividends Back Micro- to Micro- Utilities/Micro- Investors Lenders Recipients of Synergy Power and Loans National Renewable Energy Laboratory Innovation for Our Energy Future
    • Vision for Global Network of Micro-Investors National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 36 commentary Importance of mobile technology for financial transactions: 1) Thinking several steps ahead in terms of the ability to create economic opportunities without hard currency for security of BOP entrepreneurs as well as enhanced fluidity of financial resources that can create more efficiencies in transactions…also several steps ahead but may address issues of governance corruption in conflict ridden nation-states 2) Madison Avenue and Social Entrepreneurship: ―Hearts and minds‖ example of where players used to leveraging consumer behavior from corporate perspective (MasterCard ad firm example) now turning attention to clean energy opportunities. The immediacy of message can be synergized with micro-investment opportunity. Debate: Haitian model of text message for $10 donation…would this same strategy work with micro- investments.? Paint the picture, woman watching Oprah given the message on women helping women through SE Fund…would that resonate? 3) Building on ―hearts and minds‖ leveraging interactive platforms (YouTube) to show development in the field to expand communications to more Synergy Network investors National Renewable Energy Laboratory Innovation for Our Energy Future
    • Leveraging Current Media Social Media opportunity- acceleration of Synergy Network approach through access to other existing networks (Highlands Mommies example). Viral nature of communications and awareness using this approach– use YouTube example of uploading one’s own perspectives ―from the field‖ National Renewable Energy Laboratory Innovation for Our Energy Future
    • Synergy Network Managed for flows of insights and access Social Micro Entrepreneurial Investments Fund Dividends Back Micro- to Micro- Utilities/Micro- Investors Lenders Recipients of Synergy Power and Loans National Renewable Energy Laboratory Innovation for Our Energy Future
    • SE Fund/ Micro-Investment Model Social Entrepreneurship Fund Start-up capital for SME (“wholesalers” of app. tech) Funds for micro-loans to BO P community Funds for financing portable renewables Funds for communications to new investors & BOP recruitment/training R&D Funds for “garage project” development National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 40 commentary Further definition of content & strategy, oversight and management of SE Fund- each basket of activity represents its own IRR and level of risk Need for micro-investment approach…mitigation of risk to individual investor as small scale investments are aggregated; unintended consequence of exponential participation in clean economic infrastructure by greater number of individual investors (again, hearts and minds part of the equation) Paypal approach for financial transactions Mobile technology billing versus dividend statements Question of complexity…have been pointed towards software and other supporting technologies; options trading online is possible so this should be manageable…again, emphasis on innovation in terms of access to capital and finance facilitated by non- hard currency transactions… National Renewable Energy Laboratory Innovation for Our Energy Future
    • Why Innovation in Finance is Necessary: Current Social Entrepreneurs for BOP National Renewable Energy Laboratory Innovation for Our Energy Future
    • Slide 42 commentary •Bangladesh model: 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 •Grameen Shakti model: 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. •Solar Electric Light Fund/ Solar Cookstove International: •KIVA model •ASME model •Sample SE work: PowerMundo, TerraEndeavors, MannaEnergy National Renewable Energy Laboratory Innovation for Our Energy Future
    • Kiva example- SE and $ National Renewable Energy Laboratory Innovation for Our Energy Future
    • ASME example- SE and Ideas National Renewable Energy Laboratory Innovation for Our Energy Future
    • Synergy Network Project Roadmap What are the best “Best practices” models right now Technology for aligning CT guidelines for development with BOP markets? Who are the best Identified and Market partners for deployment? committed partnerships Where are the Best “work- roadblocks for arounds” for Policy transactional interim flows? development National Renewable Energy Laboratory Innovation for Our Energy Future
    • Many thanks… National Renewable Energy Laboratory Innovation for Our Energy Future