Stewart Craine - Sustainable Energy Access for Rural Homes

7/31/2019 Stewart Craine - Sustainable Energy Access for Rural Homes

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ACEF, ADB, May 2012

Sustainable Energy Access

For Rural Homes

Incentives & Barriers



ACEF, ADB, May 2012

Disclaimer

Personal reflections as social/energy entrepreneur

Views provided are not those of Barefoot Power

New hat – industry-focused non-profit group:

Village Infrastructure Angels (VIA)

www.villageinfrastructure.org





ACEF, ADB, May 2012

Summary

• Off-grid focus (no discussion on feed-in tariffs, etc)

• Barrier analysis

Raising capital and investor appetite

Government policy Technical

• Incentives

Existing

Potential



ACEF, ADB, May 2012

Barriers - capital

• 70 deals to raise $7 million over 6 years ($1.5m equity)

• Zero institutional equity from early '09 to early '12 as

revenue soared 20x from $300k to >$6 mill

•Institutional deals 6-18 months vs hypergrowth

• HNW angel investors + supplier finance fill the gap

• No thanks/mercy from institutions, will watch you die

• Lack of working capital = massive supply gaps

• Success can kill you. So can Inst. Investors + grants

• Lesson: Investing own money vs other people's money

• Need streamlined early stage investing – sidecar fund





ACEF, ADB, May 2012

Improvements?

• Learn from / recognize history

• Real social capital – current interest rates = 10-36%

• Do deals faster

Agreed rough rules on valuation (eg. 0.5-2x revenue) Auto-investment fund for lemming effect, faster deals

Entrepreneurs use online data room and 100s of FAQs



ACEF, ADB, May 2012





ACEF, ADB, May 2012

Cost to Government of funds

2-5% loans still given for rural electrification



ACEF, ADB, May 2012

2% loans = $9.8b

5% loans = $5.1bGuarantees = $26b

2%

5%

Guarantees

2% loans = $9.8b

5% loans = $5.8bGuarantees = $26b

Total = $42b



ACEF, ADB, May 2012

3-6% equity as % of assets for power infrastructure in “good old days”

Very high use of debt (20:1 leverage)..........basically impossible today

Higher equity today = higher dilution for founders = <51% ownership?Debt will do the heavy lifting of getting power to the poor, not equity

A role for Subordinate Venture Debt? 2-5% 5-10 year loans? Revenue-share?

This kind of true patient capital no longer exists for SMEs, only for governments



ACEF, ADB, May 2012

Improvements?

• Learn from / recognize history

• Real social capital – current interest rates = 10-36%

• Do deals faster

Agreed rough rules on valuation (eg. 0.5-2x revenue)

Auto-investment fund for lemming effect, faster deals

Entrepreneurs use online data room and 100s of FAQs







ACEF, ADB, May 2012

Incentives - existing

• Competitions and grants Lighting Africa, Solar for All / Canopus, Postcode Lottery, Ashden,

Shell Foundation, other....?

Some are not regular

Useful but very small compared to scale of problem• Subsidies

India Rs 90/Wp ($2/W), Nepal similar? ....any other in Asia-Pacific?

Limited to Made-in-India products

Costs time/money to do the paperwork, cash very slow to arrive “per Watt” or “per kW” promotes power generation and

discourages investing in energy efficiency (eg. LEDs)

• Other? Free office incubators? Free investor/customer linkages?





ACEF, ADB, May 2012

Thank you Stewart Craine

[email protected]

Documents

Stewart Craine - Sustainable Energy Access for Rural Homes