We have two broken systems — energy and finance — that conspire to support a centralized, coal-based grid that exacerbates climate change and fails to serve the poor in developing countries.
That means 1.3 billion people around the world won’t escape the dark (while simultaneously frying the climate) — unless we disrupt these systems and deploy distributed clean energy.
Three months ago, the Sierra Club worked on a pilot project with SunFunder to promote a potentially disruptive solution: solar crowdfunding for the world’s poor. We have a few preliminary lessons we’d like to share about taking it to scale.
Let’s start with the good news. In three short months, the clean energy access project is already fully funded. The project raised $15,000 to fund ReadySet Solar Kits from Fenix International for 375 energy entrepreneurs in Uganda who will power mobile phone charging and lighting for up to 19,000 households. SunFunder has also raised $120,000 for eight projects that benefit 28,377 people directly. Not bad for a year’s work.
Let’s compare that to the World Bank. A 2010 Oil Change International study found that of all fossil fuel projects the World Bank supported, none provided energy access for the poor. The only energy project that actually delivered energy for the poor was a $1.25 million investment in biomass gasifiers that benefited 2,500 people in India (thanks to Husk Power). For those keeping score, that’s 28,000 people helped by SunFunder versus 2,500 directly helped by the World Bank.
Not bad on SunFunder’s end, but clearly not the scale we’re looking for. After engaging SunFunder on this project, and working with off-grid clean energy entrepreneurs demanding $500 million for their sector, we have learned a few lessons that we think have big implications.
Lesson #1: Small is big. There is not a single energy entrepreneur in energy access who is not focused on deploying decentralized clean energy. Talk to entrepreneurs who eat, sleep, breathe this stuff and you’ll see they recognized long ago that decentralized, small-scale clean energy is usually always the right tool for the job.
That’s why companies like SunFunder that specialize in financing these businesses can outpace entities like the World Bank 10-to-1 when it comes to the number of lives impacted. The best part is that they do it despite having only a fraction of the available capital.
Lesson #2: Small is fast. In the absence of significant resources or media attention, SunFunder was able to raise the money from the crowd in just three months. Ask any entrepreneur who has engaged entities like the World Bank and you’ll understand that this is far, far faster than they are capable of. On top of that, entrepreneurs can be turned down at the end of a lengthy process with the World Bank — meaning they spent time and money for nothing.