Just attending REEM'09 courtesy of Sirona Fuels , a company that is working with small scale farmers in Emerging markets to grow biofuel feedstocks. They then leverage their access to capital and biofuels expertise to extract maximum value across the supply chain.
Key take aways from the conference:
1. Money for Renewable Energy Projects in Emerging markets:
a) USTDA
B) OPIC
C) USAID
D) EX IM Bank
2. There are companies that have technology and project execution expertise looking
for quality partners to work with in emerging markets.
a) Sirona Fuels
b) SunEdison
c) Envision Solar
d) Dissigno
e) Recurrent Energy
Of course, bringing together the financing, the technology and the expertise and executing in emerging markets calls for managing all the moving parts effectively. However, the declining cost of technology, particularly PV, the increasing pool of technical expertise and the global focus on Renewable Energy both for Climate Change mitigation as well as energy independence all work towards making the space ever more attractive.
Friday, May 1, 2009
Sunday, April 26, 2009
Hamburg, Germany
What economic crisis?
The skyline of one part of Hamburg. Notice the large number of cranes competing with the skyscrapers. Clearly a lot of construction going on. Not sure whether it is based on German's stimulus package or by a thriving economy in Hamburg, but what is clear is the level of investment being undertaken.
 |
| From Hamburg |
The skyline of one part of Hamburg. Notice the large number of cranes competing with the skyscrapers. Clearly a lot of construction going on. Not sure whether it is based on German's stimulus package or by a thriving economy in Hamburg, but what is clear is the level of investment being undertaken.
Afrika Verein
Just spent a week in Hamburg where I attended the Afrika-Verein
The topic was on "Creating a Sustainable Energy Parntership". This was particularly true in the case of Germany working with Nigeria to form a comprehensive technology and expertise relationship in which Germany would supply their tens of years of experience in the energy sector and their undisputed superior technology to Nigeria's complex power sector challenges in exchange for access to Nigeria's Natural Gas.
Apparently, Nigeria has been flaring it's natural gas that comes as a bi-product from its oil wells. Natural gas, currently trading at $6 to $8 is a valuable commodity that will only continue to grow in value as it gains a large percentage in the electricity generation sector. Among its strong selling points are the fact that it is cleaner than coal and burns efficiently with current combined cycle turbines. The challenge in Nigeria has been to capture the natural gas. No current infrastructure exists to this end and so this will be a comprehensive nationwide program. I also believe that Germany is anxious to diversify its source of Natural gas for heating and electricity generation from Northern Europe and Russia, with the latter currently accounting for 34% of all of Germany's natural gas supply. The issues in Georgia and Ukraine in the last few months may be one more reason that Germany desparately wants to and needs to diversify its production.
What was most interesting about this partnership between the German Govt. through several energy companies and the Nigerian government is that it is touted as an equal partnership and a win win situation for both countries. Germany wants to distant itself from the "exploitation" mentality that pervades the "natural resource extraction" industry across Africa. Of particular note is that this arrangement was sealed under the growing and rather ambitious presence of the Chinese. From conversations with high ranking Nigerian energy officials, it sounds like the Chinese had opportunities to step up but consistently under delivered on quality hence the need to form the partnership with the Germans. How accurate this is, is anyone's guess.
One dark spot on this partnership as was raised in the closing discussion in Hamburg is that while private German companies are involved on the German side, on the Nigerian side, it is strictly a Government affair. This was attributed to the fact that there are no "real" Independent Power Producers in Nigeria at the moment. However, there are measures at policy level that are being undertaken to address this under the Power Holding Company of Nigeria PLC.
I am willing to bet on a much stronger Nigerian electricity sector in the not too distant future. And if this model is succesful, it could form a template for future win win partnerships between African Countries and natural resource constrained countries.
The topic was on "Creating a Sustainable Energy Parntership". This was particularly true in the case of Germany working with Nigeria to form a comprehensive technology and expertise relationship in which Germany would supply their tens of years of experience in the energy sector and their undisputed superior technology to Nigeria's complex power sector challenges in exchange for access to Nigeria's Natural Gas.
Apparently, Nigeria has been flaring it's natural gas that comes as a bi-product from its oil wells. Natural gas, currently trading at $6 to $8 is a valuable commodity that will only continue to grow in value as it gains a large percentage in the electricity generation sector. Among its strong selling points are the fact that it is cleaner than coal and burns efficiently with current combined cycle turbines. The challenge in Nigeria has been to capture the natural gas. No current infrastructure exists to this end and so this will be a comprehensive nationwide program. I also believe that Germany is anxious to diversify its source of Natural gas for heating and electricity generation from Northern Europe and Russia, with the latter currently accounting for 34% of all of Germany's natural gas supply. The issues in Georgia and Ukraine in the last few months may be one more reason that Germany desparately wants to and needs to diversify its production.
What was most interesting about this partnership between the German Govt. through several energy companies and the Nigerian government is that it is touted as an equal partnership and a win win situation for both countries. Germany wants to distant itself from the "exploitation" mentality that pervades the "natural resource extraction" industry across Africa. Of particular note is that this arrangement was sealed under the growing and rather ambitious presence of the Chinese. From conversations with high ranking Nigerian energy officials, it sounds like the Chinese had opportunities to step up but consistently under delivered on quality hence the need to form the partnership with the Germans. How accurate this is, is anyone's guess.
One dark spot on this partnership as was raised in the closing discussion in Hamburg is that while private German companies are involved on the German side, on the Nigerian side, it is strictly a Government affair. This was attributed to the fact that there are no "real" Independent Power Producers in Nigeria at the moment. However, there are measures at policy level that are being undertaken to address this under the Power Holding Company of Nigeria PLC.
I am willing to bet on a much stronger Nigerian electricity sector in the not too distant future. And if this model is succesful, it could form a template for future win win partnerships between African Countries and natural resource constrained countries.
Sunday, February 15, 2009
Saturday, February 14, 2009
Energy - Kibera and other Slums the New Saudi Arabia
Kibera is an informal settlement in the heart of Nairobi City Center the size of Central
Park in New York City. Population estimates range from 700,000 to over 1 million
people living in this space. Population growth estimates project a doubling in population
by the year 2020.
Being an informal settlement with such a large population, infrastructure is very limited
and there is very little if any urban planning. This results in huge challenges in sewer and
garbage disposal.
Currently, there are youth groups involved in a project called “Taka ni Pato” that collect
household garbage and use it to make compost. The compost is sold for modest amounts
of money in the ksh 10 to ksh 30 ( $.14 to $43 ) per kilo to farmers. Any plastics
collected are sold to companies who recycle the material.
The sewer infrastructure constitutes of:
* Pit Latrines: These are owned and operated by landlords, local NGOs or CBOs
that allow Kibera residents to use them for a fee.
* Bushes along the River: For those residents who cannot afford the modest fee
($.07), they use the bushes along the river at night.
* Septic Tanks: Some more formal buildings have septic tanks that serve as
reservoirs for sewage.
We propose a comprehensive waste to energy solution for Kibera. The goal would be to
provide portable toilets (Porta-Jons) spread out throughout Kibera where residents would
have the opportunity to use them for free.
We would develop hand driven equipment for emptying the toilets at specific intervals
depending on volume of usage. In the USA, Port-a-jons used on construction sites are
emptied by modified trucks that ensure sanitation for the worker. The waste collected
from these would be delivered in a biogas digester that we would use to generate methane
gas. Using this methane gas and reciprocating engines, we would generate electricity to
feed into the grid. While the current feed-in-tariffs are not attractive on their own, by
leveraging the community infrastructure component, carbon credits and monetizing the
compost, the project would effectively generate positive cash flows and be sustainable.
We propose movable toilets as the government is in the process of upgrading the slums.
That said, we anticipate the process to be slow and therefore feel that there is large
enough a population base that will continue to need this service.
Implementation:
For the project to be successful, we must work with the community, its leaders, existing
solution providers and the government.
Already trained and formed groups such as the “Taka Ni Pato” group would work on the
emptying and cleaning of the toilets in exchange for income pegged on volume,
cleanliness of their Port-a-jons and other incentives. By incorporating energy generation,
the youth will have an additional revenue stream.
We must not deprive existing solution providers of their revenue. So a careful analysis of
how best to incorporate them in the project or help generate alternate revenues will be
key to the success of our project.
Revenue Steams:
Fee from the Govt. for sanitation services:
While we will be providing a key service to the community, we anticipate a long drawn
out discussion with government on if they will pay a fee for our services and what that
fee will be. So while this is a possibility, it shouldn’t be required in establishing the
viability of this effort.
Electricity generation through biogas
Using Biogas digesters, we will generate biogas to power engines that generate
electricity. Kenya currently has a feed in tariff of $.07/kWh for biomass energy
generation.
Biogas sales
Whenever possible, we will site our digesters in proximity to biogas off takers such as
industries that can use it for boilers or other uses that need thermal power. Currently,
such industries utilize diesel or Heavy fuel oil.
Compost sales
Due to the inclusion of human waste in the composting, we will need to identify non food
farmers who are willing to purchase the compost.
Biodiesel Production
Alternatively, we are also looking at growing jathropa plantations for biofuels. Farmers
near our plantations will also be invited to grow the same on an “out grower”
arrangement. Since we will be targeting marginal agricultural lands, revenues from
growing jathropa will essentially exceed the current low to no yield on such lands for the
farmers. This model has the added possibility of generating employment for the biodiesel
plant while increasing the income of the small farmers. Additional opportunities exist to
monetize the carbon offsets through jathropa propagation.
Electricity generation through biomass gasification:
For the 15% to 20% trash that will not be suitable for biogas digestion including plastics,
tires etc, we will utilize biomass gasification to generate electricity. While we would get a
better value for this through gasification to fuel, the technology isn’t as well developed.
Park in New York City. Population estimates range from 700,000 to over 1 million
people living in this space. Population growth estimates project a doubling in population
by the year 2020.
Being an informal settlement with such a large population, infrastructure is very limited
and there is very little if any urban planning. This results in huge challenges in sewer and
garbage disposal.
Currently, there are youth groups involved in a project called “Taka ni Pato” that collect
household garbage and use it to make compost. The compost is sold for modest amounts
of money in the ksh 10 to ksh 30 ( $.14 to $43 ) per kilo to farmers. Any plastics
collected are sold to companies who recycle the material.
The sewer infrastructure constitutes of:
* Pit Latrines: These are owned and operated by landlords, local NGOs or CBOs
that allow Kibera residents to use them for a fee.
* Bushes along the River: For those residents who cannot afford the modest fee
($.07), they use the bushes along the river at night.
* Septic Tanks: Some more formal buildings have septic tanks that serve as
reservoirs for sewage.
We propose a comprehensive waste to energy solution for Kibera. The goal would be to
provide portable toilets (Porta-Jons) spread out throughout Kibera where residents would
have the opportunity to use them for free.
We would develop hand driven equipment for emptying the toilets at specific intervals
depending on volume of usage. In the USA, Port-a-jons used on construction sites are
emptied by modified trucks that ensure sanitation for the worker. The waste collected
from these would be delivered in a biogas digester that we would use to generate methane
gas. Using this methane gas and reciprocating engines, we would generate electricity to
feed into the grid. While the current feed-in-tariffs are not attractive on their own, by
leveraging the community infrastructure component, carbon credits and monetizing the
compost, the project would effectively generate positive cash flows and be sustainable.
We propose movable toilets as the government is in the process of upgrading the slums.
That said, we anticipate the process to be slow and therefore feel that there is large
enough a population base that will continue to need this service.
Implementation:
For the project to be successful, we must work with the community, its leaders, existing
solution providers and the government.
Already trained and formed groups such as the “Taka Ni Pato” group would work on the
emptying and cleaning of the toilets in exchange for income pegged on volume,
cleanliness of their Port-a-jons and other incentives. By incorporating energy generation,
the youth will have an additional revenue stream.
We must not deprive existing solution providers of their revenue. So a careful analysis of
how best to incorporate them in the project or help generate alternate revenues will be
key to the success of our project.
Revenue Steams:
Fee from the Govt. for sanitation services:
While we will be providing a key service to the community, we anticipate a long drawn
out discussion with government on if they will pay a fee for our services and what that
fee will be. So while this is a possibility, it shouldn’t be required in establishing the
viability of this effort.
Electricity generation through biogas
Using Biogas digesters, we will generate biogas to power engines that generate
electricity. Kenya currently has a feed in tariff of $.07/kWh for biomass energy
generation.
Biogas sales
Whenever possible, we will site our digesters in proximity to biogas off takers such as
industries that can use it for boilers or other uses that need thermal power. Currently,
such industries utilize diesel or Heavy fuel oil.
Compost sales
Due to the inclusion of human waste in the composting, we will need to identify non food
farmers who are willing to purchase the compost.
Biodiesel Production
Alternatively, we are also looking at growing jathropa plantations for biofuels. Farmers
near our plantations will also be invited to grow the same on an “out grower”
arrangement. Since we will be targeting marginal agricultural lands, revenues from
growing jathropa will essentially exceed the current low to no yield on such lands for the
farmers. This model has the added possibility of generating employment for the biodiesel
plant while increasing the income of the small farmers. Additional opportunities exist to
monetize the carbon offsets through jathropa propagation.
Electricity generation through biomass gasification:
For the 15% to 20% trash that will not be suitable for biogas digestion including plastics,
tires etc, we will utilize biomass gasification to generate electricity. While we would get a
better value for this through gasification to fuel, the technology isn’t as well developed.
Monday, June 16, 2008
Aid vs Enterprise
On Emeka's blog, Africa Unchained he mentions an article by Thilo Thielke on Der Spiegel. Thilo's position is that aid to Africa causes more harm than good. While it is difficult to talk in absolutes, there is anecdotal evidence to both support and discredit his position.
After the post election violence, I had an opportunity to visit with quite a few NGOs that were involved in the peace effort in some way or another. I was really impressed with the caliber of people working in these organizations. From a entrepreneur standpoint, I made a mental note to recruit from the NGO World next time I am hiring.
NGOs in Kenya, particularly the well funded "Multinationals" have access to the best talent in Kenya. They renumeration structure is based on Western salary scales. This means that they can afford to hire the best talent in the country, talent that would be a great resource to the private industry. The are some industries such as the mobile phone and the name brand accounting firms that are able to compete, but based on a conversation with an HR manager of one of the multinational car companies in Kenya, hiring and retaining top employees is a huge challenge in Kenya. One might argue that when the best brains are working for NGOs and are interested in alleviating the problems in the country, then they are talent is being applied in the best possible way.
At a conference at Stanford University, Larry Brilliant, Executive Director of Google.org presented on Google.org's work around the World. After the presentation, an Engineering Student at Stanford University who is originally from Ethiopia, approached him and mentioned that Google.org had funded a NGO to provide market data from poor farmers to vendors in the City in Ethiopia. While the idea was noble, there was an existing entrepreneural venture that was already providing the data and hoping to expand nationally. The entrepreneural venture was faced by the unfair competition that was the donor funded NGO. Larry Brilliant was careful to indicate that his organization was not involved and works very hard to ensure that they don't step on small enterprises. This example however, illustrates the risk that a donor funded organization might outspend a local entreprise and nip its success in the bud.
I think that both Aid and private enterprise have roles to play in development. I believe that where possible, private enterprise should be encouraged because it is more sustainable. Aid should come with an expiration date and a clear path to sustainability so that the work and investment done during the "project" doesn't go to waste once the funding runs out.
After the post election violence, I had an opportunity to visit with quite a few NGOs that were involved in the peace effort in some way or another. I was really impressed with the caliber of people working in these organizations. From a entrepreneur standpoint, I made a mental note to recruit from the NGO World next time I am hiring.
NGOs in Kenya, particularly the well funded "Multinationals" have access to the best talent in Kenya. They renumeration structure is based on Western salary scales. This means that they can afford to hire the best talent in the country, talent that would be a great resource to the private industry. The are some industries such as the mobile phone and the name brand accounting firms that are able to compete, but based on a conversation with an HR manager of one of the multinational car companies in Kenya, hiring and retaining top employees is a huge challenge in Kenya. One might argue that when the best brains are working for NGOs and are interested in alleviating the problems in the country, then they are talent is being applied in the best possible way.
At a conference at Stanford University, Larry Brilliant, Executive Director of Google.org presented on Google.org's work around the World. After the presentation, an Engineering Student at Stanford University who is originally from Ethiopia, approached him and mentioned that Google.org had funded a NGO to provide market data from poor farmers to vendors in the City in Ethiopia. While the idea was noble, there was an existing entrepreneural venture that was already providing the data and hoping to expand nationally. The entrepreneural venture was faced by the unfair competition that was the donor funded NGO. Larry Brilliant was careful to indicate that his organization was not involved and works very hard to ensure that they don't step on small enterprises. This example however, illustrates the risk that a donor funded organization might outspend a local entreprise and nip its success in the bud.
I think that both Aid and private enterprise have roles to play in development. I believe that where possible, private enterprise should be encouraged because it is more sustainable. Aid should come with an expiration date and a clear path to sustainability so that the work and investment done during the "project" doesn't go to waste once the funding runs out.
Saturday, June 7, 2008
Redefining Cash Crops
What is a cash crop? According to Wikipedia, a cash crop is any crop that is grown for money. In Kenya, Coffee, Tea, Pyrethrum etc are the main cash crops. Our grandparents raised our parents on these crops, educated them and built concrete floors using cash crop proceeds. But according to my grandfather who passed away last year, his coffee farm no longer provided cash but rather consumed it. Being a practical guy, I spend very little time following discussions at the World Trade Organization or a gazillion other organizations that seek to level the playing field on farm subsidies etc. I believe these discussions are a critical part of the overall solution, but I also think there needs to be some "hard ball" play so to speak.
How many Kenyans drink coffee? Besides the Java Coffee shop enthusiasts who pay $3 for a cup of Coffee in Kenya, there is a very limited audience for coffee ( happy to take corrections). Most people I know drink tea. So why do we produce such a vast amount of coffee? Because at one time, it was a great crop. It still is, but relative to other crops, its lost is caffeine. I propose we clear 80% of our coffee farms and grow a "real cash crop". Jathropa.
At the risk of simplifying this too far I'll attempt to illustrate; the farmer makes very little money on coffee, spends a fortune on pesticides, fertilizers and labor and gets $.50/lb for his coffee. Per hectare, a coffee farmer's best case scenario is $732 net assuming a conservative 40% cost of fertilizer, labor and pesticides. In contrast, Jathropa is $900 net. The key would be to modify all the local coffee processing plants into jathropa into biodiesel processing plants. The infrastructure exists. Each area near a processing plant has matatus, tractors, lorries, generators and SUVs, all of which would be ready customers for biodiesel and would pay cash for it. No 3 to 6 months waiting period for the farmer to get paid.
These are not scientific figures, but they certainly raise the question of what should we consider a cash crop. And this would have a lot of positive consequences. Suppose the supply of coffee dropped by 80%, those who chose to stay in it could get a better price at the market, they would be calling the shots. Diesel prices would either have to come down from their current ksh 100+ to compete with biodiesel ( Ministry of energy estimates Biodiesel at ksh. 45/litre, I think that is a tard aggressive) or seek customers elsewhere.
And food insecurity would not be an issue for the Kenyan coffee grower.
To put the issue of cash crops in context, a couple of years ago, when the oil price per barrel was at the bargain basement price of $60 per barrel, my company's shipping costs for fresh fruits and vegetables to Paris were 50% of the total delivered value of the shipment in France. I hate to think what that ratio looks like today.
If you are growing coffee for sentimental reasons, like my mother who keeps a couple of cows for the same, or the California guy in Los Altos Hills who has a 20,000 square ft home and 10,000 s/f vineyard, then keep the coffee. If you are interested in a revenue stream, rethink the whole coffee as a cash crop thing.
How many Kenyans drink coffee? Besides the Java Coffee shop enthusiasts who pay $3 for a cup of Coffee in Kenya, there is a very limited audience for coffee ( happy to take corrections). Most people I know drink tea. So why do we produce such a vast amount of coffee? Because at one time, it was a great crop. It still is, but relative to other crops, its lost is caffeine. I propose we clear 80% of our coffee farms and grow a "real cash crop". Jathropa.
At the risk of simplifying this too far I'll attempt to illustrate; the farmer makes very little money on coffee, spends a fortune on pesticides, fertilizers and labor and gets $.50/lb for his coffee. Per hectare, a coffee farmer's best case scenario is $732 net assuming a conservative 40% cost of fertilizer, labor and pesticides. In contrast, Jathropa is $900 net. The key would be to modify all the local coffee processing plants into jathropa into biodiesel processing plants. The infrastructure exists. Each area near a processing plant has matatus, tractors, lorries, generators and SUVs, all of which would be ready customers for biodiesel and would pay cash for it. No 3 to 6 months waiting period for the farmer to get paid.
These are not scientific figures, but they certainly raise the question of what should we consider a cash crop. And this would have a lot of positive consequences. Suppose the supply of coffee dropped by 80%, those who chose to stay in it could get a better price at the market, they would be calling the shots. Diesel prices would either have to come down from their current ksh 100+ to compete with biodiesel ( Ministry of energy estimates Biodiesel at ksh. 45/litre, I think that is a tard aggressive) or seek customers elsewhere.
And food insecurity would not be an issue for the Kenyan coffee grower.
To put the issue of cash crops in context, a couple of years ago, when the oil price per barrel was at the bargain basement price of $60 per barrel, my company's shipping costs for fresh fruits and vegetables to Paris were 50% of the total delivered value of the shipment in France. I hate to think what that ratio looks like today.
If you are growing coffee for sentimental reasons, like my mother who keeps a couple of cows for the same, or the California guy in Los Altos Hills who has a 20,000 square ft home and 10,000 s/f vineyard, then keep the coffee. If you are interested in a revenue stream, rethink the whole coffee as a cash crop thing.
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