Gone are the days when alternative energy sources were deemed exotic, kooky and far-out. With feed-in tariffs (FITs) gaining traction around the globe as the policy mechanism of choice to promote and deploy the use of renewable energy sources, entrepreneurs in Asia are steadily taking on the issue of granting energy access to the “grid-less”.
One such enterprise is the Stiftung Solarenergie Philippines (SSP), the Asian affiliate of the German-based Stiftung-Solarenergie Solar Energy Foundation (SEF) that aims to alleviate poverty in developing countries through the use of renewable forms of energy.
Recognizing the fact that many of the poor and poorest countries of the world are at the same time the sunniest regions of the planet, the SEF network seeks to prove that decentralized power generation by solar energy is an outstanding technical solution for the 1.6 billion off-grid population.
“Globally, solar energy is still very much in its infancy,” says social entrepreneur Jaime Ayala, former president of Ayala Land, Inc. turned chairman of Stiftung Solarenergie Philippines. “This is because solar versus ‘on the grid’ is still very expensive.
It’s much cheaper, frankly, to make electricity using coal, hydro and the traditional sources, which is why for solar and alternative energy in general, you need feed-in-tariffs by the government. This basically says that if you give me solar, I will give you a subsidy.”
Around the world, solar energy is still heavily subsidized in an attempt to promote and help drive the growth of the industry. “The thing is,” Ayala continues, “when you talk ‘off-grid’, solar makes a lot of sense. Ang kalaban mo is not the centralized on-grid electricity…ang kalaban mo is kerosene and batteries.”
According to Ayala, it is actually even more expensive for the poor not to have electricity because a typical off-grid family would then rely heavily on kerosene for indoor light and their livelihood, on batteries for their radios and flashlights, and traveling to town to charge their mobile phones for P10 to P20. “If you look at how much electricity is in a battery, it’s 4,000 times what you’re paying for Meralco,” informs Ayala.
“So the poor, grid-less population is paying 4,000 times more for electricity,” he points out, “and it’s actually in this area that solar energy can compete in. Panalo ang solar dyan. We can deliver electricity cheaper than the battery—but we cannot deliver that same electricity cheaper than Meralco. That’s kind of where solar is in the Philippines.”
Ride For Light
Last April 16, SSP launched the “Ride For Light 2011” nationwide campaign to call attention to its mission of electrifying all isolated villages in the country.
A 6,400- ki lometer, 19-day motorcycl e adventure that kicked of f at kilometer zero in front of the Rizal monument in Manila to Pagudpud in Luzon, Zamboanga in Mindanao and ended at the La Mesa Eco Park in Quezon City last May 6, the Ride For Light 2011 provided over 70 off-grid communities across the Philippines with safe, reliable and sustainable solar energy systems for their homes, businesses and community centers.
Sustainability is key here, emphasizes Ayala, which is why SSP goes beyond handing out solar lantern dole-outs to the poor. Instead, what it did with Ride For Light was it dispatched over 600 systems and these were donated to about 40 partners.
“We donated the lanterns to our partners in different communities,” Ayala explains, “and we want our partners to use that as seed capital in order to start the whole process of building the industry. The partner works with the community, he has these solar lanterns and he comes up with rent-to-own payment schemes so members of the community can not only use the technology, but it’s also financially sustainable.”
It’s a business model that’s quite similar to the microfinance industry.
“CARD-MRI , a microf inance institution and one of our partners,” Ayala cites as an example, “has over 1.2 million customers. They’re helping so many people, but it’s being cash flow positive that enables them to grow. So we need the same kind of organizations that are not purely commercial, but at the same time not an NGO.”
Rise of the Social Enterprise
This isn’t exactly the first time solar energy was introduced to the Philippine market, but this could very well be the first one that works. “The reason why past solar programs failed in general around the world is that hindi buo ang system,” Ayala points out.
Ayala shares that even CARDMRI had a big solar program a few years ago, and that it, too, failed. “A lot of the solar programs in the country were project-based and donated,” he shares, “and if it’s donated, saan ang revenue stream mo for maintenance? If you look at Meralco, every time you pay your bill, there’s money there that goes to their maintenance. In Solar, it has to be the same thing. You need to rewire the system to make it whole.”
It’s really about building bridges, Ayala asserts. “We’re trying to buildan ecosystem where all organizations have the same social objective.
The problem is that normally what happens is when you’re out there in Bukidnon, for example, you’re the only one there and no matter what you do, it isn’t enough,” which is why there is a need to set up social structures, knowledge management processes and enterprise support systems. It’s a process that worked for SEF’s business model in Ethiopia, and one that SSP currently replicates in the Philippines.
All About Perspective
To date, more than 4 , 0 0 0 households in at least 10 provinces have been provided access to solar lighting systems by SSP. The paradigm shift here, says Ayala, “is that it’s not a business, which is really for profit; it’s not an NGO, which is more dole-out and charity; and it’s not government, which is supposed to do it but it’s not very efficient and doesn’t really think it through.
It’s really a hybrid of all that—because we do play a public service role like the government and we do use grants and donations, but we’re also using business principles to find a paradigm that is primarily about development.”
While social solutions are starting to slowly enter the mainstream, Ayala asserts that there are still those stuck on the old paradigm of social development resting largely on the hands of the government and the NGOs. “Before people were saying, ‘problema yan ng government—it’s not my problem,’ but now they’re realizing that maybe it’s their problem, too.
But they’re still stuck on that old paradigm, and it can be very hard to shift,” he says, adding that it’s for the same reason he chose to focus on social development full time. “Now are key performance indicators, metrics and bonuses have social objectives.”
It’s very different from a corporation trying to do CSR (corporate social responsibility), underlines Ayala , “ because corporate, kahit papano, the main objective is still the bottom line.
The CSR is only from the excess, as opposed to it being central to what the company is all about. CSR, for me, is just token—you may spend P300 million on it, and that’s already big, but in the context of everything, that’s probably less than half a percent of your whole business. It can be good for your brand, but then lip service lang yan. What if you spend most of your time trying to really solve the problems of the poor?”