A Future For Global Micro-Energy Finance?
Wednesday, July 21st, 2010
Mission driven financial institutions in the developing world, like those in the United States, are beginning to explore creative ways to use energy finance to encourage sustainable economic development. Recently, I attended a conference on energy financing at Yale’s School of Management where representatives from microfinance institutions, energy service companies, and governments from around the globe all convened to explore the opportunities and challenges presented by small-scale alternative energy systems.
Insights from this conference include:
- The talent pool examining energy financing is astounding and it extends from one corner of the earth to the other. Very smart, tech savvy entrepreneurs are creating an array of exciting tools to help deploy alternative energy systems in very remote locations. By using mobile technology, GPS systems, and internet applications, businesses are utilizing sophisticated new technologies to facilitate loan payments, track carbon savings, and monitor energy performance from every corner of the Earth.
- The problems confronting wide-scale adoption of small-scale, alternative energy systems internationally are familiar to those of us working on deployment of these systems domestically. The issues range from technology risk, to the economic viability of the energy systems, to concerns about installation and maintenance, to the difficulties of dealing with the relatively large transaction costs that come with deploying alternative energy.
The business models being developed to tackle the issues outside of the US are similar to those gaining attention in the U.S. For instance SELCO, a leading solar technology firm in India, employs a business model similar to Solar City, the fast growing PV installer in the Southwest. In both cases, these companies have simplified the process for their customers by offering solar packages that include financing, extended warranties, and long-term service contracts. These firms have pre-selected specific solar applications, offer pre-packaged financing, and provide in-house installation and maintenance over the life of the systems.
While overcoming the challenges limiting widespread adoption of small-scale alternative energy systems is a prodigious undertaking, the talented entrepreneurs dedicated to tackling the problem across the globe offer hope for a brighter future.
