Energy Access Is The Foundation Of True Democratization
by Shazia Khan
February 13, 2019
This interview with Shazia Khan, an environmental lawyer, expert in off-grid clean energy solutions, and founder of EcoEnergy, was conducted and condensed by frank news.
Can you tell me about your background and how you came to this work?
I'm a Pakistani-American. I visited Pakistan a lot as a child, and speak the language, so I have a lot of personal ties there. My professional background is as an environmental lawyer. Energy is my area of specialization. I started my career at the World Bank, but had this idea in my mind, even when I was in law school. How do we take something like energy access and make it a priority for the private sector? Which is often times the group that has the resources to make the changes that need to be changed. What can you structure to create incentive for them to get involved and support a social mission or goal?
The idea came in 2001, but since then so much has changed. This concept of social enterprise and entrepreneurship, which didn't have a name back then, started to evolve in a really beautiful way. A lot of companies in the private sector, and a lot of investment firms, decided that a triple bottom line, including an environmental and a social impact component to their investment decisions, was important. For whatever reason, it's important to them, whether it's part of the PR campaign, or whether it's genuinely important to them, it doesn't really matter. What matters is that some resource dollars are now being allocated towards social impact projects.
While I was at World Bank, my boss's boss was working on the Inga Dam Power Project. The World Bank decided they were going to increase their renewable energy portfolio by 20%. They started by building huge hydropower plants all over the world. The Inga Dam Power Project would have the ability to electrify all of Sub-Saharan Africa and parts of the Middle East, but they put it in the Democratic Republic of Congo, which was and still is, quite conflict ridden.
Even if somehow the energy that was generated wasn't all diverted for industrial or commercial purposes, how was it going to trickle down to people living off the national electric grid? Would there be an incentive to electrify those people? The way energy access has unfolded in the West is through government subsidized programs. There's been grid expansion so that anybody, no matter how remote, within the country, will be electrified. But emerging economies and frontier markets don't have the money to do that. So what can they do? One thing they can do is leverage technology. Mobile technology has made a lot of things possible that weren't possible 20 years ago, certainly not 50 years ago.
I started thinking about, is there a more grassroots approach to electrification, and does it have to be as expensive as it is now? Does it have to be that a power plant has to be built, it has to cost millions of dollars, sometimes billions of dollars, and then need to be very labor intensive? Even after the fact, the costs are so high, is the customer whose been connected able to pay for that service? Maybe not. I run across people all the time where power lines go over their homes in rural Pakistan, and they choose not to be connected because it might cost them $60 or $70 a month. The reason it's so expensive is because they're having to cover the cost of building that infrastructure.
What we do is called distributed solar. It's taking small solar home systems and putting them on the roofs of homes and small businesses. Some people are like, "That's cute, but it's not a long term solution. You really need to wait for the infrastructure for the grid connectivity."
And to me, that's like someone saying, "Well your cell phone's really cute, but you should really be waiting for the infrastructure for a landline to be built into your house." That's ridiculous.
That's really antiquated, and as soon as people found that cellular phones were actually much more convenient and much cheaper, they started adopting them in a widespread manner. That's happened all over the world, and wasn't anticipated. In this same way, I feel that distributed solar can be adopted, deployed rapidly, much more efficiently, and cheaply, than traditional grid expansion.
I did field work in 2008 in Pakistan, and in 2009 launched a non-profit called Eco Energy Finance. The purpose of Eco Energy Finance was to build a business case for affordable solar energy for off-grid people in Pakistan. We had to do extensive market research first to understand who this group of people were, what all the different segments were, and then what their purchasing power was? What their purchasing power was genuinely. Not, "Let's shove this product down their throats and hope that they can afford it, but what can they actually afford? And can we match a technology and a product to them, and distribute it to them?”
I met my co-founder in 2010. He was working on energy access surveys, and I had just received a very small grant. We decided to team up and build a skeletal team of 12 people to go and collect this data. We went to 44,000 households. Really trying to understand the true picture of what their lives were. We wanted to understand their consumer preferences without any sort of bias. What type of technology or what use cases are really going to fit their lifestyle? Then we spent three years market building.
We tested a number of different products, and within that time, a new technology became available. It's called "Pay-As-You-Go Solar." The concept is that in the same way somebody in a developing country will go every month and pay for their cell phone. Pay-As-You-Go technology for solar allows you to do the same thing. You go to the same mobile money agent and you give them a fee – we can remotely unlock the corresponding amount of electricity to them, and they get an automatic receipt on their cell phone. If they don't pay, we can shut the system off remotely. When they do pay again, we can turn it back on. It's just like a cell phone.
Only 13% of people in Pakistan have bank accounts. We're, at the same time, generating a credit score for them and deciding who we're going to take a bet on because ultimately what we're doing is financing the cost of a solar home system for them. We're buying it, they pay us a deposit, and then they give us monthly payments until the system is theirs. They can also pay rent every month and we can just perpetually rent the system to them.
We did that for seven years, had 200 customers, and a repayment rate of over 85%, which is pretty high. We decided, "Okay, this is a commercially viable model that we can take to investors." So we re-launched as Eco Energy Global. Eco Energy Finance, the non-profit still exists and we will use it again to go and explore other markets, but Eco Energy Global went out to raise investment money.
Things are going well, but it's been a long road.
To clarify, you’re using off-grid solar as your primary energy system? Do you feel like that's the future of energy? That everything will be private?
I think we'll get a happy medium. For instance, our customers all have these independent solar systems on their houses. But that's because they're coming from having zero demand, to now having a little bit. Eventually we’ll have to connect them. We’re going to be piloting a mini grid next year. I think what will end up happening is that people will either have community based micro or mini grids, and they will be able to plug and play the systems they already have into that system.
Alternatively, in areas that are much more established, I think there will be a way for private, maybe community based solar to feed into and supplement the grid that already exists. I don't think in developed countries the grid is going away necessarily. It's relatively affordable. It's relatively efficient. But I think there are other ways to have an interface between these newer technologies where people feel like they have more say and more control in the fuel source. People will start pushing towards renewable and demand that of their utility companies. As long as there's a way to integrate new energy capacity being generated into those systems, I think that's where a lot of the work and the evolution will come.
With solar and wind I worry about resiliency. When you're dependent on something natural that you can't control, and there is no mass process for storing energy, what happens in a scenario where there is no sunshine, or too much sunshine? How do you deal with that?
That's a really great question, and that's becoming an increasingly important question as time goes on. There's this race for storage capacity. How do you take renewables and store them? I think a lot more innovations will come out of that. In a country like Pakistan with very high solar radiation, it's not as much of an issue just because it's sunny all the time.
Does too much sun ever cause outages?
No. Our customer will be able to power the product for four hours during the day, and then they'll have, say 16 hours of power. There is a battery being used. There is a battery in the system. The batteries will have to get larger and larger and more and more efficient. It's not a problem to us right now, but that will be a problem for the whole industry moving forward.
A race in the tech to create storage.
How affordable is solar?
We've got a solution that's a four watt solution that costs $35 a system. Somebody will pay a couple dollars a month for 18 months until they pay it off. Then there's a larger system that's a 12 watt, and costs $80. People will pay $9 a month until they pay that off. Then there's the one we sell the most, the 50 watt system, and that costs $100. Whatever configuration a person wants, we can supply them with that. Then like I said, we're going to be piloting a mini grid soon too.
What we really look to do is figure out what people are currently spending and then try something comparable in cost to, or less than, what they are already spending. A lot of the small business owners, for instance, don't usually use kerosene, they use diesel generators, but that diesel generator might cost $35 a month. We can offer them something for $28 a month, and as they're paying $28 dollars a month to us and paying off the product, the fuel source becomes free. Whereas a diesel generator you have to pay in perpetuity.
Are you looking also to integrate this idea into U.S. energy systems?
Probably not to be honest with you. There's 1.4 billion people globally who are completely off the grid, zero electricity. We will look more at markets similar to Pakistan. We're looking at Afghanistan next. I'm really interested in looking at overlooked markets, and for whatever reason, people are not interested in going into these countries, but there's definitely a demand. Bringing something as basic as electricity could be life changing.
We're not the only ones doing this. I would say globally there's about 15-20 entrepreneurs just like me who do this in frontier markets. I met colleagues that are working in the Philippines, all over east and west Africa, Vietnam. Any place there's a high density population and a huge off grid population is a good place for us to go to.
Energy access is a basic infrastructure people need to improve the quality of their life. Electricity is an underlying basic infrastructural need that needs to be in place before anything else can be delivered.
Energy access for us is a starting point and a very, very critically important one because it's a foundation to so many other things, and to true democratization.
If somebody has to walk eight hours a day to go and collect fuel wood, they're contributing to deforestation, and that eight hours a day could be spent doing something more productive. As far as countries like the United States, what I see happening is that consumers have demands unlike the consumers of 20, 30, 50 years ago. People care about where their money is going, where their dollar is going, and they want to know that it's being used in a way that drives what their personal values are. Consumers will probably be demanding more and more clean energy, to be integrated into the traditional grid system. The technology to become grid independent if you're a person that wants to do that, is becoming available. So, that might happen too.
I wonder how we'll be able to participate in clean energy on a large scale in Western countries with our current grid.
It takes, on average in a developing country, nine years to have a grid line built out to you and hook you onto it. That's somebody's entire childhood. Being an environmentalist with my family originating in Pakistan, I was thinking, this is a country of 210 million people. It's about to be the fifth largest country in the world in terms of population, and the population's not slowing like it is in India or in China. How are we going to meet the demand of these new people? Two thirds of the population is under the age of 35. We need to figure out ways to meet the demand. They're going to continue to have growing energy needs.
How do you define energy democracy?
Democratization means giving people access to the basic infrastructure that's available to people in other parts of the country. If you extrapolate from that globally, developing countries are not able to contribute to their local or national economies, or to the world economy, because they don't have access to basic infrastructure, and that's why they're not able to break the cycle of poverty.
Globally, there needs to be a democratization of energy, because it's one of the fastest ways to allow people to break the cycle of poverty and enable them to contribute to their household and to the local and national economy.
It has to be done. Now it’s just how are we going to do it, and how can we do it quickly, and can we think of new ways to do it? Why do we have to rely on antiquated ways of doing things now that we have new technology? It's an equalizer.
International development experts have figured out it's really important for developed countries to help developing countries have democratized energy, and for everybody in these countries to have access to basic infrastructure, like clean drinking water, electricity, healthcare, and education. It makes for a much more stable population.
Any time we speak with or work with the U.S. government, there is a clear recognition that if the United States wants to spend their money on security, outside of military aid, building basic infrastructure and making sure people have access to basic infrastructure, is good for security.
We need people to have a chance at living within a certain standard. You don't know where the next major insight or breakthrough is going to come from. If people don't have a fighting chance to develop a thought or an idea, because they're so focused on meeting their basic needs, those innovations won't come to light. A rising tide lifts all boats.
If we can leverage technology to make energy access quickly and cheaply and efficiently, I think it's a win-win globally. It's definitely a priority globally. It's one of the sustainable development goals. It's Number 7 in the Universal Energy Act, so there is a recognition globally that this should be a priority, and it's just a matter of getting there.
There are a lot of us working on it, we'll get there eventually.