A few things energy companies ought to be aware of

In June 2018 I joined one of the Working Groups of the new Global Plan of Action (GPA) for Sustainable Energy Solutions in Situations of Displacement (led by UNITAR). After the first meeting, I realised that this is a relevant topic which requires urgent action. I therefore started doing some research into how energy companies might be able to help in delivering sustainable energy solutions in refugee camps and what the main opportunities and barriers are. I would like to share with you a few points.

In 2017 approximately 87.3 million people around the world were displaced, 18.8 million due to natural disasters and 68.5 million due to conflict [1]. For these people access to energy is essential for cooking food, heating shelters, cooling vaccines, charging mobile phones and powering humanitarian operations. However, around 90 percent of refugees living in camp settings lack access to electricity and 80 percent rely on firewood or charcoal [2]. Consequently, displaced families burn an estimated 64,700 acres of forest every year [3]. In addition, energy is extremely expensive for displaced people. The current situation also disproportionately affects women’s safety when they collect firewood in remote locations and their health when they inhale fumes while cooking [4].

Energy is extremely expensive for humanitarian agencies too. A recent survey of 21 organisations operating in camps for displaced people in Jordan, Kenya and Burkina Faso found that the prices they are paying for energy are excessively high and that they are overwhelmingly dependent on oil fuel for electricity generation. It concluded that by improving efficiencies and using renewable energies the humanitarian sector could save around 60 percent of its spend on generation and simultaneously reduce greenhouse gasses emissions. According to the World Food Program (WFP), the average cost per kWh of electricity in humanitarian compounds is three times higher than in the UK: $0.60 compared with $0.20. In refugee camps operational energy is mainly generated by inefficient diesel generators which sometimes become non-operative after 6-12 months. In terms of emissions, the average carbon intensity of an electricity generator in humanitarian compounds is apparently almost two thousand times higher than in the UK: 1,040 g CO2/kWh compared with 0.56 g CO2/kWh. If the figure for humanitarian compounds is correct, this is a staggering statistic [1].

In an attempt to tackle the above issues the United Nations Institute for Training and Research (UNITAR) initiated, in January 2018, the development of a Global Plan of Action (GPA) for Sustainable Energy Solutions in Situations of Displacement. This is a strategic framework that aims to provide access to affordable, reliable and sustainable energy for all displaced people by 2030 by mobilizing partnerships among host-governments, the private sector, humanitarian organizations, donors, financial institutions and academia [4].

This initiative represents a potential opportunity for Energy Companies. If an energy company delivered a sustainable energy service in a refugee camp, it would increase its social and environmental impact in a number of ways. It would contribute to SDG 1 because access to energy would create opportunities to overcome poverty; to SDG 3 because women would avoid inhaling fumes; to SDG 7 because it would increase access to affordable and clean energy; to SDG 10 because it would reduce inequality between men and women; to SDG 13 because it would reduce greenhouse emissions; and to SDG 15 because it would avoid further deforestation [5]. As a result, it would improve its position in the Sustainability Indexes. Furthermore, David-Pluess et al. affirm that there is a clear commercial case for engaging in the refugee response as a way to access new markets, test new products, or secure commercial contracts for the delivery of goods and services [6].

How to do so?

As the average lifetime of a refugee camp is over fifteen years [7], a humanitarian response needs to include not only emergency relief but also long-term solutions [8]. However, most energy projects implemented to date involve the donation of free-delivery energy solutions rather than the deployment of Sustainable Business Models with long-term impact.

It is widely recognised that free-delivery models prevent local energy markets from flourishing and consequently deny local communities the opportunity to create financial feedback loops, which in turn prevents the empowerment and economic development of refugees [9]. The reselling of products, tensions with host neighbourhoods and dependency syndrome among refugees are some of the negative impacts. By contrast, experiences from market-based solutions offer a stronger basis for long-term sustainable business models [10]. A market approach transforms the refugees from passive recipients into active consumers, enabling them to express choice.

Humanitarian agencies have accepted the need to move away from free-delivery models and towards the development of sustainable business models, as well as to reduce their energy costs in refugee camps. They also recognise that the private sector is well positioned to contribute to achieve both goals [11] [12].

But, is this feasible?

Probably yes! For instance, the International Finance Corporation calculated that Kakuma camp and surrounding neighbourhoods
(in Turkana County, Kenya) represent a market opportunity of US$56 million [13]. An additional survey in Kakuma-I found that 17 percent of households would pay for a $126 solar home system, and 18 percent for a $10 solar lantern, representing a solar-product market of 5,000 households and $300,000 of refugee household demand (RHD). Kakuma-I also has 108 operational facilities (schools, clinics, compounds, offices) with no grid connection and no central mini-grid system. Only priority facilities receive power from stand-alone diesel generators [14]. This represents an opportunity to offer energy services at an operational demand level too.

Kakuma refugees, who depend on aid, can receive a stipend up to $60/month [14] and they already spend US$10-20/month on energy, which suggests that existing demand could support a formal energy market [3].

A study conducted by the Moving Energy Initiative in Kenya found that with a solar/diesel hybrid mini-grid solution providing 1,037 kWh/day of operational demand the reduction in costs would require a payback period of only four years [1]. Given that around 90 per cent of camp residents lack access to electricity [2] and many local neighbourhoods face similar situations, it could make it worthwhile from a business perspective to invest in delivering energy services to meet both refugees household demand and local neighbourhood demand [6]. In these cases, the operational demand could act as a minimum guaranteed load, with the possibility of extending the grid to cover refugees’ household demand and local neighbourhoods demand if the market opportunity exists.

In the course of my research I interviewed eighteen energy and humanitarian experts working in relevant organisations such as UNITAR, UNHCR, Naturgy, Practical Action, Sustainable Energy for All, Chatham House, EDP and Caixabank. The whole research explores the following:

• Examples of previous projects, lessons learnt and recommendations.

• On-field energy needs, opportunities, suitable energy-delivery models, major challenges and potential solutions.

If you are interested in knowing more do not hesitate to get in touch!

REFERENCES


1- Grafham, O., & Lahn, G. (2018). The Costs of Fuelling Humanitarian Aid | Moving Energy Initiative. Moving Energy Initiative. Retrieved from https://mei.chathamhouse.org/costs-fuelling-humanitarian-aid
2- Lahn, G., Grafham, O., & Annan, K. A. (2015). Heat, light and power for refugees: saving lives, reducing costs. Royal Institute of International Affairs.
3- Davies-Pluess, J., & Hare, C. (2018b). Safe and sustainable off-grid energy solutions (p. 16). Business Fights Poverty Challenge.
4- UNITAR. (2018). The Global Plan of Action for Sustainable Energy Solutions in Situations of Displacement: A Framework for Action. United Nations Institute for Training and.
5- UNSTATS. (2018). Global indicator framework for the Sustainable Development Goals and targets of the 2030 Agenda for Sustainable Development. New York, NY: Springer Publishing Company. https://doi.org/10.1891/9780826190123.0013
6- Davies-Pluess, J., & Hare, C. (2018a). Resilience through refugee-inclusive business, emerging business models and enablers of scale. (p. 16). Business Fights Poverty Challenge.
7- UNHCR. (2016). Kenya Comprehensive Refugee Programme. Programming Solutions. Retrieved from https://www.unhcr.org/ke/wp-content/uploads/sites/2/2016/05/Kenya-Comprehensive-Refugee-Programme-document-KCRP-20161.pdf
8- Saldinger, A. (2017, September 20). Could new leadership mean a long-awaited humanitarian aid, development alliance? Retrieved January 20, 2019, from https://www.devex.com/news/sponsored/could-new-leadership-mean-a-long-awaited-humanitarian-aid-development-alliance-91083
9- Rosenberg-Jansen, S., Barlow, M., Peisch, S., Ponnan, N., & Rathi, P. (2018a). Sustainable Humanitarian Energy Services. Inclusive participation, lessons learnt, and paths forward. Practical Action. Retrieved from https://infohub.practicalaction.org/bitstream/handle/11283/620670/Policybrief_7_web_updated.pdf;jsessionid=171E94DD34D292FA5AA4EBB6978E4077?sequence=1
10- Bellanca, R. (2014). Sustainable Energy Provision Among Displaced Populations: Policy and Practice (p. 61). CHATMAN HOUSE, The Royal Institution of International Affairs.
11-Masinde, J. (2018). Leading Innovative Clean Energy Initiatives for Refugees. Retrieved from https://mei.chathamhouse.org/joshua-masinde-meeting-refugees%E2%80%99-energy-needs-burkina-faso-and-kenya.
12- Van-Landeghem, L. (2016a). Private Sector Engagement: The Key to Efficient, Effective Energy Access for Refugees.
13- IFC. (2018). Kakuma as a Marketplace: A consumer and market study of a refugee camp and town in northwest Kenya. International Finance Corporation. Retrieved from https://www.ifc.org/wps/wcm/connect/8fb8fab4-af24-4b09-bdff-2109d2c45974/20180427_Kakumaas-a-Marketplace_v1.pdf?MOD=AJPERES
14- Vianello, M., & Corbyn, D. (2018). Meeting Refugees’ Energy Needs in Burkina Faso and Kenya: Prices, Products and Priorities (p. 74). Moving Energy Initiative: clean energy for refugees.

2 thoughts on “A few things energy companies ought to be aware of

  1. First of all, congratulations on working on such an important case and sharing this with others. For me, this topic, especially in such depth, is something really new and exciting. The solar cooker project shows me how a seemingly simple project can make such a difference (by simple I mean that even I can understand the idea behind the design of such a cooker, although my knowledge of engineering and physics is below basic 🙂 ) Engaging in such an initiative is certainly an enriching leadership opportunity and it looks like its benefits are twofold. You can test and train your leadership skills in setting and achieving your sustainability goals in this context, but also learn a lot through interactions with people and thus gather some new skills and insights shaping your personal development pathway.

    In your next blog or comment I am looking forward to learning a bit more about your strategic goals within this initiative. At the moment, it looks like you have already embarked on one, i.e. researching, gathering primary data and sharing this with the world, thus raising awareness. I wonder, whether you have some additional goals in mind? Anyway, many thanks for sharing this very inspirational post!

    Liked by 1 person

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