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Energy In Common Launches Kiva-like Platform to Combat Energy Poverty

| Monday May 10th, 2010 | 2 Comments

Did you know that 2.4 billion people worldwide lack access to energy?  Hugh Whalan, CEO of Energy in Common (EIC), refers to these people as energy impoverished and has made it his mission to eradicate 15 million cases of energy poverty in the next five years by making green energy loans powered by individual contributions.

“Two point four billion people are forced to rely on archaic energy resources like dung, kerosene and firewood to live, work and play. These fuels are expensive, dangerous, and harmful to the environment. Many people have been talking about the problem and co-founder Scott Tudman and I just decided to jump right in and attempt to fix it – one loan at a time if we have to,” Whalan explained, a clear thought leader in the space.  He noticed that energy was at the core of the cycle of poverty – for example, using antiquated forms of energy like firewood takes more time and money.  Without energy you can’t pump clean water, you can’t study or work after dark and you can’t refrigerate food, which causes 40% of agricultural produce to get wasted in developing countries.

An Australian, Whalan came to the US on an exchange program to Cornell and grew to love America’s “unique tolerance to risk.”   Entrepreneurs need to be able to fail to thrive, and he noted that while “the attitude to risk in the US is perfect for entrepreneurs – it’s quite different from the attitude to risk back home.”

Launching last month, EIC works directly with microfinance institutions (MFIs) to reach their target market – the energy poor.  While 150 million people are reached by microfinance, less than 1% of those families have received an energy loan.   EIC makes loans of $50 to $1000 towards green energy for the energy poor, which includes fuel-efficient cook stoves, solar powered light and solar drip irrigation systems

EIC values being able to measure the environmental impact of its work. It administers questionnaires before and after the loans to collect detailed information on quarterly energy usage patterns.  It is also building an ambassador program similar to Kiva’s Fellowship program to collect in depth socio economic data on loan recipients via questionnaires and interviews.  And it is implementing a program of in-country auditors who collect and validate data on loan use.

Since EIC measures the emission reductions created by each green energy loan, it plans to allow lenders to purchase them to offset their personal emissions. “This will allow our lenders to offset their own emissions in a more personal way than ever before while knowing their purchase is helping to fund more green energy loans for the poor,” said Whalan.  That said, they will self-certify the offsets as UN certification is simply too expensive and time consuming for the scale they operate on.  Whalan has a background in the carbon markets and is passionate about improving the process so that its more usable for projects with the greatest impact on the poor, like his.

Like Kiva, lenders are repaid in full for the amount of the loan, but make no interest.  Lenders also get the option to purchase a personalized carbon offset.

I’m always fascinated by organization structure.  Whalan told me he set EIC up as a non-profit for 2 reasons

  1. The brand is important. And as a grassroots consumer facing organization they felt they could build more trust as a nonprofit.
  2. They wanted to not only address the problem with loans, but also raise awareness around energy poverty, and showcase models that work, an activity typically relegated to nonprofits.

Is energy poverty a compelling issue to you?  If so, would you make a microloan on EIC?  Why or why not?


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  • http://twitter.com/OKL Olivia Khalili

    Aime,

    Great piece. I find energy poverty compelling when the connection is made, as you've done here. I think we'll see more attention to energy as an important component of welfare, as has happened with clean water in recent years. Thanks for profiling a great organization, and in particular, for relaying Whalan's reasons for creating EIC as a nonprofit. I love knowing the rationale that dictates organizational structure too.

  • http://twitter.com/OKL Olivia Khalili

    Aime,

    Great piece. I find energy poverty compelling when the connection is made, as you've done here. I think we'll see more attention to energy as an important component of welfare, as has happened with clean water in recent years. Thanks for profiling a great organization, and in particular, for relaying Whalan's reasons for creating EIC as a nonprofit. I love knowing the rationale that dictates organizational structure too.

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