INCLUSIVEINNOVATIONS

BusinessModelsforConvertingWastetoEnergyInnovationsolutionsaregeneratingenergyfromlandfill-boundwaste,providingenvironmentalbenefits

SummaryInefficientdisposalofwasteinlargequantitieschokeslandfillsandwaterbodies,ultimatelyresultinginhealthand environmental issues. Low and middle income countries lack adequate infrastructure and technologyrequiredforefficientsolidwastetreatment.Mixedwasteisparticularlydifficulttotreatduetoheterogeneityandlackofsuitabletechnology.Allwaste,therefore,endsup,inlandfillsandopendumps,andposesrisksofgarbagefireandchokingwaterchannels.Alternatively, it is incinerated,whichoftencausesairpollutionanddeterioratestheenvironment.Untreatedwastecauseshugeenvironmentalimpactonwildlife,ecosystemsandtohumanhealth.Muchofthiswaste,however,retainsvalue,andcanberecycledandreused.Significantamountofwastecanproduceenergythatreplacesexpensivefuels.Inrecentyears,researchanddevelopmenteffortshaveresultedin many waste treatment solutions that generate energy from landfill-bound waste. Waste-to-Energyenterprisesbringinnovativetechnologiesaimedataddressingwastewhileensuringbettersustenanceoftheenvironmentandminimumdamagetotheecosystems.Thetwomajortypesofwaste-to-energytechnologiesareon-site(decentralizedenergygenerationnearthesourceofwaste)andoff-site(centralizedwastegenerationawayfromthesourceofwaste).Thesetechnologiesproduceenergyproductssuchasbriquetteandbiogasforheatingandcookingpurposesandelectricitygeneration.Afewenterpriseshavealsoinventedtechnologytoconvertplasticwasteintopetroleum-basedfuel.

DevelopmentChallengeGlobally,millionsoftonsofwasteisgenerated,ofwhich60percent1isorganicandcanbereprocessed.Low-incomecommunitiesareoftenunabletoaffordstructuredwastemanagementprocessestodisposetheirtrash.Mostofthewasteendsupinopendumpsitesnearresidentialareas,causingdiseases,pollutingtheenvironmentandoccupyingextensivespace.Whilerecyclingandreusingaredisposaloptions,theyarenotalwaysfeasibleforalltypesofwaste.Recyclablewastecanalsobecomesocontaminatedthattheycannotbeeconomicallyor

1 Clean India Ventures Ltd.

HIGHLIGHTS• Waste-to-energyenterprisesreduceCO2

emissions,savetrees,savetimespentoncollectingfirewood,providesmoke-freeenergy,anddelivercashsavingsfromreplacementofexpensivefuel.

• On-sitewaste-to-energyenterprisesempowerhouseholdstorecyclethewastetheygenerateintoenergy(mainlybiogas)fortheirownconsumptionorsaletotheircommunity.

• Off-sitewaste-to-energyenterprisesarehighlyscalableandprovideproducts(briquettes,liquidfuel)thataremorecost-effectivethantraditionalenergy.products(woodcharcoal,diesel).

April2017/2

practicallyrecovered.Moreover,sincewasteisnotsegregatedatsource,itisdifficultandunviabletorecyclemixedwaste.Hence,thewasteistypicallydumpedintolandfillswithoutbeingtreated,posinghigherrisksofenvironmentaldamage.Incineration is another commonly employed means of managing waste. Estimates of global black carbonemissionssuggestthat40percentcomesfromopenburningofbiomass,includingforestandgrasslandfiresandopenburningof bothurbanandagriculturalwaste,while 60percent comes fromenergy sources, includingpower plants, industry, transport and residential fuel use2. Lack of effective methods in disposal of non-biodegradable plastics leads to soil degradation and impacts groundwater tables. Since plastics aremanufacturedfromcrudeoilderivatives,dumpingusedplasticinlandfillsrepresentsahugewasteofenergythat,ifrecovered,coulddiminishthepaceatwhichfossilfuelsarebeingdepletedglobally.Withgrowingpopulations, there is increasingpressureontheEarth's resources forenergy.Waste-to-energysolutions to convert different types of organic waste into clean-burning fuel helps save forests and cutsgreenhouse gas emissions by replacingwood, charcoal and fossil fuels for cooking and industrial processes.Besidesbeingcleanerandeasiertomanage,biomassbriquettesarealsolesspollutingandhaveahighercalorificvaluethanthetraditionallyusedwoodandcharcoal.Wetorganicmatterlikeanimaldung,kitchenleftoversandhumanwastecanbeusedtoproducebiogas,amixtureofmethaneandcarbondioxide,aswellasasemi-solidresidueforcompost.Forfamiliesinthedevelopingworld,usingbiogascanreplacethelessefficientwoodthatemits health-damaging smoke. Biogas and briquette usage also reduces deforestation and greenhouse gasemissions,thushelpinginclimatechangeefforts.BusinessModelIn recent years, social enterprises have commercialized waste-to-energy technologies to convert theunrecyclable waste to affordable fuel products, either at the source of waste generation (on-site) or at acentralizedfacility(off-site).ComponentsoftheModelFigure1.On-siteconversionofwastetoenergy

Manysocialenterprisesprovideinnovativesolutionsthatenablehouseholdsorbusinessestoconvertthewastethey generate into useful energy. These enterprises treat waste at source to bring down transportationinefficiencies and consume low-cost energy for domestic/industrial purposes. For example, The WasteTransformer,anenterprisethatoperatesinSub-SaharanAfrica,offersgasifierwaste-to-electricityinstallationsthatcanhandleawidevarietyofwastestreamsasitsinput,includingwood,food,plasticsandagriculturalwaste.Thesewastesarethenturnedintoheatandgas.Theresultantgascanthenbeusedtogenerateelectricity.Figure2.Off-siteconversionofwastetoenergy

2 Global Waste Management Outlook, UNEP

April2017/3

Someenterprisesdeploylargescalesolutionswherewasteisprocured,transportedtoprocessingfacilitiesandcentrallyprocessedintoliquidfuelorbriquettes.Theseenterprisesemploywastecollectorstoaggregatewasteandtransportittotheirplantstherebyprovidinglivelihoodopportunitiestolocalpeopleandreducingtheflowofwastetolandfilldumps.Forexample,India-basedRuralRenewableUrjaSolutionsmakesbiomassbriquettesusingforestresiduesoragro-wastewhichincludedryleaves,grass,weeds,forestresidue,cowdung,sawdustfrom local sawmills, andhighly inflammablepineneedles. Thesebriquettes are then supplied tobrick kilns,manufacturers,boileroperatorsforsteamgeneration,andfoodprocessingindustriesthatusecoalforheatingpurposes.Similarly,SGFE(SustainableGreenFuelEnterprise),anenterpriseinCambodia,manufacturescharcoalbriquettesusingcoconutwasteandwoodcharwaste.Figure3.Descriptionofon-siteandoff-siteconversionofwastetoenergy

CostFactorsOn-sitewaste-to-energyenterprises incurhigh costsondeveloping andmanufacturing thewaste treatmentsystemswhileoff-sitewaste-to-energyenterprisesincurhighcostsforsettingupthewastetreatmentplants3.Off-siteenterprisesincurhighercapitalexpenditureoverall.Table1.Costcomponentsforenterprises

3 Information gathered through primary interviews with SimGas, Clean India Ventures, SGFE and Biotech India

April2017/4

Type Examplesofenterprises MaincostcomponentsOn-sitewaste-to-energyenterprises

Habona,SimGas,CleanIndiaVentures,(B)energy,BiotechIndia,SamuchitEnviroTech

• Waste-to-energytechnology/product:40percent-60percent

• Salesandmarketingcosts:10-15percent• Installationandtransportationcosts:10-20percent• Staffcosts:20-25percent• Miscellaneouscosts:10percent-20percent

Off-sitewaste-to-energyenterprises

AnkurScientificEnergyTechnologies,SGFE,BrightEnergyAfrica,SistemaBiobolsa,UrjaSolutions

• Initialoutlay(capitalexpenditure):60-70percent• Electricityandrunningcosts:10-15percent• Wastecollectionandotherrawmaterialcosts:10-15percent• HRandotherorganizationalcosts:10-20percent

On-site waste-to-energy systems treat waste locally, and hence, do not incur costs associated with wastecollection.Forexample,consumersofSimGasand(B)energycollecttheirownorganicwaste(e.g.animaldung,kitchenwaste,humanfaeces,andagriculturalresidues)andfeedthemintothemobilebiogassystemsprovidedbytheenterprises.Someenterprisesprovidecommunitylevelsolutions,whichtreatwasteandgeneratebiogasforafewhouseholds.ThecapitalcostofsettingupacommunitybiomassgasificationplantisUSD1,500perkWforplantsupto1000kW,andUSD1,200perkWforplantsof100-1000kW.RunningcostsareestimatedataboutUSD0.05perkWh.Off-sitewaste-to-energyenterprises,ontheotherhand,havetocollectwastefor conversion into fuel products such as briquettes and biogas. They alsoincur significant capital expenditure in settingup the centralized facility toconvert waste into fuel. A typical off-site biogas plant costs around USD50,000.However,withgrowingcommercialinterestinbiomassgasification,these costs are declining with a reduction in input costs. High-pressurebriquetting plants are expensive because the equipment needs to withstand the pressure involved in theconversionprocess.Forexample,atypicalpistonpressfromIndiawitha65kWmotorcostsaboutUSD17,000,andthewholeplant(includingdriers,grindersandhandlingequipmentaswellasthepress)costsaboutUSD50,0004. Such a plant produces about 700 kg/hour of briquettes, or about 1,500 tons per year. In India,production costs are about USD 60 per ton, although this varies depending on the cost of the agriculturalresidues5.RevenueStreamsThemajorrevenuestreamsforwaste-to-energyenterprisesincludesaleofwastetreatmentsystemsandenergyproductssuchasbiogasandbriquette.Briquettes are sold by off-sitewaste-to-energy enterprises at prices that aregenerallycomparable towoodcharcoalof thesamecalorificvalue.Typically,briquettesandpelletsareretailedatUSD80andUSD300perton,respectively6.Thepricesofthesehouseholdplantsvaryfromcountrytocountry,buttheyaretypicallypricedaroundUSD5007.SamuchitEnviroTechinIndiaretailsa0.3m3digesterforUSD320anda1m3digesterforaroundUSD400.Figure4.Salesforwaste-to-enregyenterprises

4 https://www.ashden.org/briquettes 5 Ibid 6 https://www.ashden.org/briquettes 7 https://www.ashden.org/biogas

Around USD 2,200 (RWF 1.7 million) is spent by Habona Biogas on monthly remuneration of its employees

Domestic biogas plants cost around USD 550 and institutional biogas plants cost around USD 50,000

April2017/5

Some enterprises such as Ventana CleanTech have a hybridmodelwherein it has both on-site and off-sitesystems.VentanaCleanTechearnsrevenuesbydesigning,manufacturing,andsellingwaste-to-energysystemstoindustrialwaste-plasticrecyclersandotherwastemanagementcompaniesthataggregatewasteplasticsfrommunicipal,industrialandcommercialsources.Italsoplanstosellhigh-gradefuelfromitsself-ownedplantstoindustriesthatconsumepetrolordieselforitsoperations.Afewenterpriseshaveadoptedanasset-lightfranchisemodelwhereintheyoutsourceboth,manufacturingandsalesofthesystems,andearnacommissionfortraining,marketingandconsultancy.Forexample,(B)energyobtainsthebiogassystemsfromamanufacturerandhasappointedruralentrepreneursasfranchisestomarketandsellthesystems.Ittakesasmallcommissionofaround10percentoneachsystem8.FinancialViabilityOn-sitebiogasenterprisessuchasSimGasearnrevenuesfromsaleofthebiogassystem(includescook-stovesandothercomponents).SimGassellstheentirekitforanaveragepriceofUSD750.IthasalsotiedupwiththeWorldBank’scarboncreditprogram,whereit ispaidfeesbasedonthecarboncreditsearnedbyitscustomers. SimGas uses these funds to cross-subsidize product prices for itscustomers.Profitabilityinbriquettesdependsuponthecostandavailabilityofrawmaterialsandthemarketprice(oftenbasedonpricesofcompetingfuels).Thismakestheviabilityofbriquettingasabusinessverysitespecific9.Perton,charcoalismoreexpensivethanwoodbecauseofitshigherenergycontentandthesameappliestochar-briquettes.SFGE’scheapestchar-briquettesretailforaboutthesamepriceaswood-charcoalinCambodia,aboutUSD0.35perkg(USD350perton).However,manyrestaurantsarepreparedtopaytwiceasmuchfortheirhighest-qualitybriquettes,becausetheseburnmoreslowlyandevenly.PartnershipsManyoff-sitewaste-to-energyenterprisespiggybackongovernmentwastemanagementprograms to installcentralizedsmall-scalewaste-to-energysystems.Forexample,CleanIndiaVentures(CIVL),anenterpriseinIndiathatmanufactureswastere-processors,hasjoinedtheSwachhBharatMission(CleanIndiaMission)toinstallcommunity-basedwastere-processormachines.Eachwastere-processorupcycles0.5–3tonsoforganicwastelikegardenwaste,templewaste,kitchenwasteandvegetablewasteintohigh-qualityorganiccomposttobeused as fertilizer or biofuel for cooking. CIVL has also partneredwith New DelhiMunicipal Council, a localGovernmentbody in India, to installplants in localities,parksandgardens.Eachof theplantscostsUSD0.2

8 Primary interview 9 Ibid

Generally, USD 1-2 is paid per carbon credit and one household reduces emission by around 8 carbon credits per year

April2017/6

million10.Waste (ofwhich90percent isorganicwasteand10percent isnon-biodegradableplasticwaste) iscollectedfromneighboringhouseholds.Thisisexpectedtodivertatleast60percentofthe4000tonsofwastegeneratedinDelhiperdayfromlandfills.CIVLalsoemploysyoungrag-pickersfromnearbyareasforgarbagecollectionandrunningoftheplants.Waste-to-energy enterprises also partnerwith localmanufacturers, R&D experts andNGOs throughout thedevelopment and implementationof their products. For example, digesters are developed anddesignedbySimGasBV in theNetherlands in close collaborationwithSilafricaandother localpartners. SimGashasalsoenteredintostrategicpartnershipswithmultilateralssuchasHivos,GlobalAllianceforCleanCookstoves,AfricaBiogasPartnershipProgram,SNVandothers.HuskPowerSystems,anenterprisebasedinIndia,hasestablishedstrategic partnership with Shell Foundation and IFC for capacity building, establishing health and safetyproceduresandtraininginfrastructure.

Implementation:DeliveringValuetothePoorAwarenessMost waste-to-energy enterprises use non-traditional marketing channels to create awareness about theirproductsandservices.Forexample,SimGaspromotesitsproductsthroughlocalchurchesandNGOsthatarewellconnectedwiththelocalcommunity.Habonapromotesitsproductthroughsocialmedia(Facebook),whileBiotech organizes roadshows around southern India, demonstrating the benefits of biogas plants to awideaudience.Theenterprisessharethattheyareabletoconvincemanypeopletoinstallbiogasplantsasaresultofthepublicity,aswellasbecauseoftherisingcostofalternativefuelsuchasLiquefiedPetroleumGas(LPG).Clean India Ventures advertises its products throughoutdoorexhibitionsandthroughthechampionshipofGovernment officials. SGFE advertises its product ontuks-tuks (three-wheeler public transport) to targetlow-incomeconsumers.Some enterprises also provide awareness and capacity building services to customers who purchase theirsolutions. For example, Sistema Biobolsa (Biobolsa) is a social enterprise that produces bio-digesters forsmallholderfarmersinMexicoandLatinAmerica.Itnotonlyofferstobuildandinstallthemachineryrequiredtocarryoutwasteconversionbutalsohelpsandteachesfarmersaboutthesystem.BiotechIndiahasawell-equippedtrainingcentertoprovidetrainingto75-100peopleatatime.Similarly,SkyLink,asocialenterprisethatbuildsandinstallsbiogasplantsinKenya,trainslocaltechnicianssothattheyhavetheskillstobuildbiogasplants.AcceptanceWaste-to-energy enterprises create win-win situations for their customers (access to clean energy) andentrepreneurs/franchise partners (additional source of income). (B)energy, awastemanagement enterprisebasedinEthiopia,provideshouseholdsinruralAfrica,Asia,andLatinAmericawithaccesstocookingbiogasbyconvertingorganicsolidandliquidwastetobiogasandfertilizer. Itsuppliesasemi-mobilebiogasproductionunit that is quick and easy to install in homes and is affordable. (B)energy customers (entrepreneurs andfranchises) can produce up to 1.5 m3 of biogas from 20 kg cow dung daily, and further sell the biogas toconsumers(neighborsandcommunitymembers)ina‘biogasbackpack’attherateofUSD4for100liters11.Themobilebackpackmakesiteasyandaffordabletotransportthegas,whichcanbeusedascleancookingfuel.

10 http://www.cleanindiatech.com/wp-content/uploads/2014/07/news-3.jpg 11 http://www.be-nrg.com/b-products/; 43.50 Euros for 1.2m3 is equivalent to USD 4 for 100 litres

Biotech India has organized 26 Energy Clubs in rural and urban areas with the association of local NGOs for the effective implementation of non-conventional energy schemes, waste management and energy conservation programs.

April2017/7

Some enterprises use local champions as employees to drive acceptance of theirwaste-to-energy solutionswithinthecommunity.BrightEnergyAfricaemploysfarmerstorunbriquettefabricatorsincentrallocations.Itleaseskilnstolocalfarmerstomakebiomasscharandbuysthatcharbackatahigherratethanthekilnlease.BEAalsoemploysunemployedwomenandyouthascommission-basedsalesagents,whoadvicefamiliesintheirnetworktoreplacetraditionalwoodcharcoalwithsmokelessbriquetteforcooking.Thiscommunity-ledmodeldrivesacceptanceandtrustthroughword-of-mouthwithinthecommunitynetwork.Off-sitewaste-to-energyenterpriseshaveinnovativemodelstoincentivizewaste collection for energy conversion. CaribShare, a Caribbean off-sitewaste-to-energysocialenterprise(NGO),collectsorganicfoodwastefromhotels and livestock farms, and converts it into biogas and then intoaffordable, reliable electricity to serve the needs of communities in ruralJamaica.Participatinghotelsreducetheirwastedisposalcostbymorethan50percent as CaribSharepicks up their organicwaste freeof charge andenhances its green/CSRbranding.Participatingfarmsreceiveacashrewardandhigh-qualityfertilizer inreturnforthecoworpigmanuretheysupply. These novel techniques encourage the hotels and farmers to participate in the waste-to-energyprograms.AccessibilityWaste-to-Energyenterprisestapintotheexistingruralnetworktoensurelast-miledeliveryoftheirsystems.Forexample, (B)energy has a decentralized hub-and-spoke distribution model wherein it appoints ‘socialfranchisees’atalocallevelandimpartstrainingtothemforfillinginthebiogasinthebackpacks.(B)energyalsoinvolveslocalNGOsandconvincesthemtomanagethetransportationofbiogassystemsandthusoffsetcarbonfootprints.Endusersareabletoconsumeorsellthebiogastheyproduceusingthe(B)energybackpacks(1back-packcanproduce3-4hoursofbiogas).Thisinnovationhasmadebiogasportableandempowershouseholdstogenerate,consumeandsellbiogas,thusincreasingaccessibility.Oftenhouseholdsarereluctanttoinvestinabiogasplantbecausetheyconsidertherunningandmaintenanceoftheplanthighlytechnical.Someofthestandardproductsmayalsohavepartsthatarenotreadilyavailablelocallyormaynotbesuitableforinstallationattheirhomes.Toaddressthis issue,someenterprisesprovidemodularorcustomizablesolutions.Forexample,India-basedSamuchitEnviroTechprovidesado-it-yourselfkitconsistingofall critical components (biogasstove, feedstock inletassembly,overflowoutletassembly,drainvalveassembly,biogasoutletassembly)alongwithaninstructionalvideo.Tanksandpipescanbepurchasedlocally,andtheplantcanbeinstalledwiththehelpofanylocalplumber,thusmakingtheoperationseasierforthe consumer. Similarly, Sistema Biobolsa ensures that it customizes its product to suit each farmer’srequirementsandprovidessuitabletrainingpertainingtoitsuseandimplementation.Thedistributionofthesemachines is done throughmicro-entrepreneurs who usemicro-finance channels tomake distribution easy,convenientandaccessible.AffordabilitySomeenterprisesmaketheiron-siteplantsaffordablebypartneringwithlocalgovernmentsthatoffersubsidiestoconsumersfortheuseofthesystems.Forexample,theMinistryofNonconventionalEnergySources(MNES)inIndiaoffersasubsidyofUSD60foreachBiotechIndiadomesticplantupto10m3capacity,andthelocalanddistrict panchayats provide further subsidies - typically USD 60 in urban areas andUSD 80 in rural areas12.ConsumerspaytheremainingamountdirectlytoBiotechIndia.Atypicalfamilynormallyusesabout168kgofLPGayear.Biogasreplacesabout50percentofthisuse,orabout84kgperyear,savingthefamilyaboutUSD53peryear13.Thismeansthatthepaybackperiodforthecostoftheplantisaboutthreeyears,whichcanbeshortenediftheycollectextrafoodwastefromshopstoincreasetheirbiogasproduction.

12 https://www.ashden.org/files/biotech percent20full_0.pdf 13 Ibid

SGFE’s provides free trial samples to restaurants and distributers. This is very effective to generate interest and ensure future sales

April2017/8

The cost of implementation of biogas technology is significantlylower than for other renewable energy technologies (wind, solar,and hydro)14, thusmaking it a cost-effective source of energy fordomesticconsumption.Manybiomassgasifiersproducebiogasthatcan lower the price of energy for small-scale industries that arelocatedinoff-gridareasandrelyondieselasasourceofenergy.Forexample,AnkurScientificEnergyTechnologiesinIndiamanufacturesbiomass gasifier systems that convertbiomass suchas ricehusk,woodand sawdust into a combustible gasmixture (known as producer gas). This gas can replace fossil fuels (coal, natural gas, light diesel oil) in anyapplication (furnaces, oil heaters and boilers). If connected with modified diesel engine-generator set, theproducergascanlowerthecostofelectricityproducedbyonlydiesel,byreplacing70percentofthediesel.Someenterprisesalsoprovideconsumerfinancetoensurethatcustomersfindtheirproductsaffordable.Forexample, Takamoto Biogas (Schutter Energy) provides pay-as-you-go biogas systems in Kenya where theircustomers(mainlysmallholderfarmers)payasmallfeetoinstallthebiogassystemandmakemobilepaymentsforthebiogastheyuse.TakamotomonitorsthebiogassystemthroughaGSMconnectedsmartmeterthatsendsinformationonunitmaintenanceandenablesthePAYGfunctionaccordingtothecustomers’credit.Since2012,ithaspartneredwithKivatoprovide0percentinterestfinancingforitsclientswhocannotaffordtopaythefullpriceofabio-digesterupfront15.Biobolsahasdevelopedaseriesofquestionsaboutnumberofanimals,typesofcrops,annualpaymentcycles,sizeoffamily,foodcosts,andeducationcoststoassessthedebtservicingcapacityoffarmers.IthasalsoimplementedaSalesforceandTaroworkssolutionthatenablesfieldtechniciansandsalesrepresentativestoenterinformationontheirsmartphonesinthefieldandlateruploadtoBiobolsa’sSalesforcedatabaseoncetheyhaveaninternetconnection.Theenterprisecanthuscaptureessentialinformationabouteachcustomerinremoteruralregionsandhelpthecreditcommitteemakeaninformedloandecision16.

ResultsandCost-EffectivenessScaleandReachOff-site enterprises offer amore scalable and cost-effective solution forwaste to energy conversiondue toeconomiesofscale.However,theyarelimitedbythehighcapitalinvestmentrequiredtostartthebusiness.Themostcommonlyseenoffsitewaste-to-energyenterprisesarebriquettemanufacturers.On-siteenterprisesaremoreeffectiveinwastemanagementastheydivertwastefromlandfills.However,manyhouseholdshesitatetoinstalltheplantintheirhomesduetothestenchandspaceconstraints.Themostcommonlyseenonsitewaste-to-energyenterprisesarebiogasplants.Ingeneral,thewaste-to-energybusinessmodelishighlyscalableandhas the potential to reach thousands of households within a few years of operations. The scale of off-siteenterprisescanbemeasuredbyvariousmetricssuchastonnageofoutput(e.g.numberofbriquettessoldpermonth),numberofcustomersserved(households,industries),numberofcountriesreachedetc.Thescaleofon-siteenterprisescanbemeasuredbymetricssuchasnumberofbiogasunitsdeployed,geographiesreached,tonnageofwastedivertedfromlandfillsetc.Off-sitebiogasmodelsachievebetterscaleandreachintermsofvolumetopeopleserved.Domesticon-sitebiogas plants have a volume of 1-12m3and serve 5-10 people. Institutional biogas plants (for schools andcommunities)rangeincapacityfromabout10m3to25m3andeachserveanaverageof250-500people.Off-sitewaste-to-energyplants,generallydevelopedinassociationwithamunicipalbodyisaround50m3andservesaround2000–25,000people17.Themanufacture,installationandmaintenanceofthebiogasplantsisestimatedat13daysforeachon-sitedomesticplant,55daysforeachoff-siteinstitutionalplantand80daysforamunicipaloff-sitewaste-to-energyplant.SistemaBiobolsahasinstalledmorethan2,200Bio-digestersinMexicoandLatin14 http://www.caribsharebiogas.com/projects 15 http://fellowsblog.kiva.org/fellowsblog/2016/08/09/by-the-numbers-sistema-biobolsa-is-ahead-of-the-curve-on-what-matters-most 16 https://fellowsblog.kiva.org/fellowsblog/2016/07/04/rural-microloans-20-a-mexican-social-enterprise-revamps-its-credit-program 17 https://www.ashden.org/files/Biotech percent20full_0.pdf; http://www.newtimes.co.rw/section/article/2015-10-27/193856/

The fuel cost for generating 1 unit of electricity is reduced from USD 0.22 (with diesel alone) to USD 0.1 when a biomass gasifier is connected to a gen-set

Biotech plants directly avoid the emission of about 3,700 tonnes/year of CO2, with further savings from the reduction in methane production from the uncontrolled decomposition of waste, and from the transport of

April2017/9

Americaandtreated150,000+tonsofwastetoproduce4500+tonsofbiogas18.BiotechIndiahascompletedmore than 22,000 household projects, 300 institutional projects, and around 60 electricity projects. Theelectricitygeneratedis40kWperyear19.Thetotalrateofbiogasproductionfromallinstalledplantsin2007wasestimatedtobeabout16,000m3/day,whichreplacestheequivalentofabout1,400tons/yearofLPGanddiesel.Briquettemanufacturersgenerallyproducearound100–200tonsofbriquetteseverymonth20.KampalaJellitoneSuppliers (KJS) isUganda's first producerof briquettesmade fromagriculturalwaste that includes sawdust,peanuthusksandcoffeewaste.Ithasthecapacitytoproduceabout2,000tons/yearofbriquettesandsellsabout130tonsofbriquetteseverymonthto31schools,universitiesandhospitalsforcookingandto5factoriesforproducingheat.Habonaoperatesatacapacityof100+tonsofbriquettespermonthandhasthepotentialtoincreaseitto300tonspermonth21.Table2.Scaleandreachofselectwaste-to-energyenterprises22

Enterprise Country Type ScaleandReach(B)energy Ethiopia,

SudanOn-site • 30biogasbackpacks(GesiShamba)soldthroughfranchises,

benefitting250peopleSimGas Tanzania,

Kenya• 800customersserved

HuskPowerSystems

India Off-site • 15,000householdsin400villagesinruralIndia

RenewableUrja

India • Capacityof15,000tonsofbriquettesperyear,servingaround0.1millionruralhouseholds

• Employmentof400people,mostlywomenSGFE Cambodia • 1,000ruralcustomersand1,000urbancustomersserved

CleanIndiaVentures

India Hybrid • 25machinesinstalled,servingaround8,000people

SkylinkInnovators

Kenya • Soldupto200domesticbiogasplantsand6large-scaleones,benefiting5,200+people

ImprovingOutcomesWaste-to-energyenterprisescreatesignificantimpactacrossmanyparameterssuchascarbondioxideemissionreduction,treessaved,timesavedfromnotcollectingfirewood,healthbenefitsofsmokelessenergy,andmoneysavedbyreplacingexpensivefuelwithlowerpricedormoreefficientfuel.Enterprisesprovidingbiogassolutionssharedoutcomedatathathighlightsthemulti-levelimpactsofthismodel,inadditiontosavingsoradditionalincometofarmerhouseholds.Table3.Impactofselectwaste-to-energyenterprises

Enterprise ImpactcreatedTakamotoBiogas

• Helpssavearound3000treesfromgettingcuteachyear• Avoids1MTCO2equivalentemissions• Savesatotalof331man-hoursspentincollectingfirewoodperday

SimGas • SavesonaverageUSD250perhouseholdperyearonenergyexpenditure23• Eachwomansaves2-4hoursadaybynotcollectingfirewood

SistemaBiobolsa

• Treated2.4milliontonsofanimalwastetoproduce4,500+tonsofbiogasandmitigate17,000+tonsofCO2

18 http://sistemabiobolsa.com/?lang=en 19 Primary interview with Biotech India, https://www.ashden.org/files/Biotech percent20full_0.pdf 20 Primary interview with SimGas 21 www.habona.rw 22 Primary interviews with the enterprises 23 Primary interview with SimGas

April2017/10

• Withabio-digester,farmerscanreplacecostlychemicalfertilizerswithbio-fertilizer,savingUSD260peryearforafarmerwith3hectaresofland

• FarmerscanreduceoreliminatetheamountofLPGtheyhavetobuytopowertheirhomesandfarms,resultinginsavingsofUSD28-40permonth

Useofbriquettes reduces thepressureonwoodresources,and thus reducesdeforestation. Inaddition, theagriculturalresiduesusedtomakebriquetteswerepreviouslyburnedastheywereregardedaswastethatposedafirehazard.Lesssmokeisproducedusingbriquettesthanusingwood,anditisremovedbythestovechimney.Briquettesneedverylittlespaceforstorage,althoughit isessentialtokeepthemdry.TheKampalaJellitoneSuppliers(KJS)briquettestovesreplacefirewoodorcharcoal.Onetonofbriquette,usedinanefficientKJSstove,replacesonaverage1.2tonsoffirewoodand0.3tonsofcharcoal24.The1,530tonsofbriquettes that theenterpriseproducesandsells, therefore, savesabout9,300tons/yearofCO2.Low-incomeresidueproducerssuchasagriculturalprocessorsarepaidUSD3-14pertonofresidue,givingthemanadditionalsourceofincome.HabonainRwandaproducesbriquettethathasacalorificvalueof12-15kiloJoules,whereasthecalorificvalueofwood/charcoalis3-6kiloJoules.Some enterprises create large-scale impact by implementingmini-grids in rural areas that complement thenationalpowergrid.Whilethesearemorematureandlargerenterprises,theyhighlightthepotentialofhowwaste-to-energymodelscanachieveimpactsbeyondonlymanagingwaste.Forexample,HuskPowerSystems,anoff-sitewaste-toenergyenterpriseinIndia,generateselectricityusingabiomassgasifierthatcreatesfuelfromricehusk.Eachplantgenerates32kWofelectricityfrom50kg(110lb)ofhusksperhour,enoughtomeetthebasicenergyneedsofabout500households,althoughthereareseveralsystemswithhighergeneratingcapacity25.Eachplantsavesapproximately42,000litersofkeroseneand18,000litersofdieselperyear,significantlyreducingindoorairpollutionandimprovinghealthconditionsinruralareas.Itcurrentlyhas100+operationalplantsinruralIndia,servingmorethan200,000peopleacross350+villages.HuskPowerextendsvillagers’activitiesbeyonddaylight hours, reduces indoor air pollution, increases thetimechildrencanstudy,reducestheamountoftimewomenspendcollectingfirewood,andreducesemissions.Formostdomesticusers,themainbenefitofanon-sitebiogasplantistheeasy,hygienicdisposaloffoodwasteandthesavingsmadeinLPGuse.Operatorsofinstitutionalplantsarepleasedwiththeabsenceofodorintheneighborhood.Forthemarketsandcouncils,theremovaloffoodwasteandtheassociatedpublichealthrisksisagreatadvantage.Theeffluentorresidueinthebiogasplantmakesgoodfertilizerwhichresultsinhigherfarmyield.Cost-EffectivenessWaste-to-energy enterprises step inwhen local governments and thepublic sector areunable toeffectivelymanagewaste. Sincewaste-to-energy enterprises achieve impact across different parameters,particularlythosesuchashealthofvulnerablepopulations,womenandchildren, their cost effectiveness is difficult to ascertain. However,enterprisesthatproducebiogasorbriquettesareensuredofamarketfor their energy products, and can ensure impact at a relativelyreasonable cost, mostly similar to the charcoal wood costs. As

24 https://www.ashden.org/files/KJS percent20full.pdf 25 https://en.wikipedia.org/wiki/Husk_Power_Systems

Briquettes cost about USD 16/tonne. Cost of cooking is similar to using firewood at USD 14/tonne because briquette stoves are more efficient. It is also considerably cheaper than using charcoal at USD 29/tonne

An average of 6.1 tons of CO2 is saved per ton of Kampala Jellitone Stove briquette used

Power generation of 1000 MW from bioenergy in India requires an investment of USD 825 million. This has the potential to generate employment for 4 million people and reduce 5.6 million of CO2 per year

April2017/11

technologyforefficientprocessingofwasteintoenergydevelops,thecostsarelikelytobelowerthanothertraditionalfuel.Mostwaste-to-energyplants thatmanufacturebriquettealsoproduceorganic compost that canbeusedasfertilizer.Severalenterprisessharedtheircostandpriceofbriquetteandcompost,indicatingthattheyareabletoearnreasonablywhileensuringefficiencygainsandcostsavings for theircustomers.Habona,awaste-to-energyenterpriseinRwanda,collectswastefromwastemanagementplantsusingequipmentthatseparateswetanddrywastetobeusedformakingbriquettes,biogasandcompost.EachkgofbriquetteissoldtodomesticclientsforUSD0.25(RWF200)andlasts3timeslongerthancharcoalofthesameprice.ThepriceofbriquetteperkgforinstitutionalclientsisUSD0.0526.ThepriceofthecompostisUSD40perlorryi.e.USD13.5perton27.BrightEnergyAfrica(BEA),aTanzaniabasedenterprise,makesbriquettesthatareover40percentcheaperandlast35percentlongerthannormalcharcoal.Cookingusingbriquettescostsaboutthesameasusingfirewood—thehighercostpertonofbriquettesisbalancedbythehigherenergydensityandstoveefficiency.CustomersalsofinditeasiertotransportandstoreBEAbriquettes,sincetheyneedasmallervolumeperweek.Similarlythe briquette produced byHabona is around 40 percent cheaper than other substitutes such aswood andcharcoal.Some enterprises have adopted unique energy provision models that make the solution cost-effective forconsumers.Thecost-effectivenessishowever,afunctionoflocalavailabilityandpriceofrawmaterial.InthecaseofHuskPowerSystems,thericehusksusedtofueltheprocessarepurchasedfromlocalricemillsforlessthanUSD20perton.ThecostofinstallationofasinglebiogassystemisaslowasUSD100perkW.Itfurtherreducescostsbyrunninginsulatedwiresalongbamboopolesdirectlytohouseholds,businessesandfarms.For7hoursofelectricity,theenterprisechargesUSD2-2.5perhouseholdpermonth,onanaverage.Theenterprisehasalsoinstalledaremoteplantmonitoringsystemtomonitorplantperformanceviainternet.Italsohasapay-as-you-gosystemwithpre-paidmetersavailableatUSD12-15thatallowscustomerstopayonamonthlybasis28.Althoughverynascent,afewbreakthroughtechnologiesarebeingcommercializedtoconvertwasteintolow-costpetroleumfuel.Whiletheircosteffectivenessisstillbeingproven,thesetechnologieshavethepotentialtobedisruptive.Forexample,Ventana,awaste-to-energyenterprisebasedinCaliforniawithR&DinIndia,deploysapatent-pending,continuousde-polymerizationprocesstoconvertwasteplasticstopetroleumfuelssimilartodieselandgasoline.Mostcompetingvariantsdeploycapital-intensivesystemstoconvertwasteplasticstoamixof synthetic crude oil,waxes and slurrieswhich have limited offtake and low economic value. Ventana hasdisruptivelydown-shiftedthecapitalcostofplantandmachineryfromUSD10-20millionfora20tpd(tonsperday)plant29,30.Thetechnologyhelpswastemanagementcompaniessaveondisposalcosts(USD40-100+/ton)whileadditionallynettingthemcashflowsofUSD200-250+pertonofwasteplastics31.Similarly,SustainableTechnologies&EnvironmentalProjects(STEPS)inIndia,hasdevelopedtwoinnovativetechnologiestoproduceliquidfuel.Thealgae-to-dieseltechnologyconvertsalgaefoundinwaterbodiesintohydrocarbondiesel(1tonofalgaeyields500litresoffuel)andbio-char,whichhasahighcommercialvalueforuseascookingfuel32.STEPS’Polycracktechnologyconvertswasteplasticintopetroleumfuels.Thisfuelcanbefurtherconvertedintovariousfractionslikepetrolanddiesel.(1000tonsofwastecanproduce120tonsofoil)33.

26 Primary interview with Habona Biogas 27 Each lorry carries around 3 tons of compost 28 http://www.cseindia.org/userfiles/Gaurav percent20Kumar_Design percent20to percent20Scale.pdf 29 http://www.firstpost.com/business/startups-business/fuel-from-trash-how-plastic-waste-can-power-your-car-in-the-future-1956467.html 30 The enterprise prefers to keep the price of its solution confidential, and has not shared it with the research team. 31 https://zerista.s3.amazonaws.com/item_files/f50f/attachments/9569/original/ventana_cleantech.pdf 32 http://stepsenergy.net/web_documents/process_brief_algae.pdf 33 http://stepsenergy.net/web_documents/divya_bhasker_translation_from__gujarat.pdf

April2017/12

ScalingUpChallengesWaste-to-energy enterprises face a number of challenges related tooperations, funding, distribution and customer outreach. Capital toestablishtheplantandfueloperationsseemtobetheleadingchallenge.Habona lacked funds to ensure an adequate number of vehicles totransportwaste to the treatmentplant. It also faced somedifficulty inmobilizingfundsfrominvestorsandconvincingthemofthebenefitof itstechnology. Itsprojecttogeneratepower fromgas soas to complement thenationalpowergrid requiredan initial investmentofaroundUSD50,000. Eventually, it received award money from the 2014 Young Innovator Award in Rwanda, AfricanInnovationPrizeand2015MandelaWashingtonFellowshipinUSA,whichitusedtoimplementtheplant.Waste-to-energyplantsneedmaintenancesupport,andoftenfacetechnicalproblemsthatneedadedicatedtechnicalstaff.Enterprisesfinditdifficulttohireandretainsuchstaffcloseathandinalltheirlocations.Forexample,BiotechIndiaoccasionallyfacedminorproblemswithblockedgaspipes(orpipeschewedthroughbyrats),watercondensinginpipes,andbrokentapfittings,whichwerequicklyfixedbyitsengineers.Biogascook-stoves alsohavea lifeof 2-3 yearsonanaverageandhave tobe replacedat a costofUSD5034. Briquettemanufacturingalsocausesconsiderablewearinthemachinesduetothehighpressure,andthepistonsanddieshavetobechangedregularly.Inmanycases,enterpriseshavetoworkhardtoovercomepeople’sexpectationsthatwaste-to-energysolutionshavetobenecessarilysubsidizedbyGovernmentprograms.AhugeamountofdonorfundingoftendistortsthemarketforprivatesectorplayersandcompetingwithhighlysubsidizedLPG(asubstituteforbiogas)isdifficult35.CleanIndiaVenturesfacedachallengewiththemindsetofthepeoplewhoassumethatwastemanagementistheGovernment’sjob,andso,despitehavingsmall-scaleplantsinnearbylocalities,wouldnotdisposewasteattheplants.RoleofGovernmentandPolicyGovernments in developing countries are keen to support the waste-to-energy business model because itaddressestwooftheirmostpressingproblems—thatofenergyaccessanddependenceonfossilfuels,andwastemanagement.InIndia,theMinistryofNonconventionalEnergySources(MNES)offersasubsidyofUSD50(INR3,000) for each domestic plant up to 10m3 capacity, and the local and district panchayats provide furthersubsidies-typicallyUSD50(INR3,000)inurbanareasandUSD70(INR4,500)inruralareas36.TheGovernmentofIndiahassetitselfatargettogenerate700MWenergyfromwasteby201937.Forthis,ithasinstructedthedistributioncompaniestopurchasepowerfromanycitygeneratingenergyfromwaste.TheGovernmentofIndiaisalsoworkingtowardsreducinginterestratesonloansforwaste-to-energyprojects.InThailand,theEnergyRegulatoryCommission isplanningtoaddupto50MWofwaste-to-energypowercapacitytocutdownthecountry’srelianceonnaturalgasandispartneringwithprivatecompaniestobuild,operateandtransfertheplants38.InEthiopia,theUK-basedCambridgeIndustriesandChinaNationalElectricEngineeringCorporationareundertakingaUSD95millionproject togenerate50MWofelectricalenergy incollaborationwith theAddisAbabacityadministration.However,clarityonpolicygoverningprivately-ownedwaste-to-energymini-gridsisimportant.Enterprisesofteninvest considerably in a new market, only to find that the national grid is moving into the same market.Availability of low-cost grid electricity impacts the financial viability ofwaste-to-energy enterprises. Lack ofregulatoryclarityhasadverselyaffectedHuskPowerSystemthathadtoshut3plantsafterconsumersmoved34 Primary interview with SimGas 35 Primary interview with B-energy 36 https://www.ashden.org/files/BIOTECH percent20full_0.pdf 37 https://waste-management-world.com/a/indian-waste-to-energy-conference-potential-for-6-gw-capacity 38 http://jakartaglobe.beritasatu.com/international/thailand-gets-strong-interest-waste-energy-power-plan/

Through the Polycrack technology, STEPS can produce 1 liter of petrol for just 20 cents

April2017/13

tothecentralizedgridintheirareaofoperations.Centralizedgridsmayjeopardizetheviabilityofmini-gridsasconsumerspreferpowerfromthegovernment.Insuchcases,mini-gridsshouldbeallowedtofeedinpowerintoacentralgridatafairtariff39.ConclusionTheseverelackofexistingmunicipalinfrastructureandcapacitytosupportefficientsolidwastetreatmentinmostdevelopingcountriesindicatesthepotentialopportunityforwaste-to-energyenterprises.Thedualimpactofthewaste-to-energymodelinmitigatingclimatechangeandinservingasanenergyresourcemakesastrongcaseforincreasedinvestmentintothismodel.On-site waste-to-energy enterprises are highly scalable and replicable given that these systems are easilyportableandcanbeusedtotreatawiderangeoforganicwaste includingagriculturalanddomestickitchenwaste. Financial viability of such enterprises hinges on consumer awareness and uptake; the number ofcustomersreacheddeterminestheextenttowhichsystemmanufacturingcostsarecovered.Theviabilityofoff-site enterprises relies largely on the support of governments to cover capital costs incurred in setting upprocessingplants.Mostoff-siteenterprisesincreasetheirscaleofoperationsbyleveragingpartnershipswithgovernmentsundertheirwastemanagementprograms.However,thescalabilityofthemodelisthreatenedbyalternativerenewableenergysourcessuchassolarpowerandwindpowerthatcurrentlygarnermoreattentionthanbiogasorbiomassenergysources.Table4.Socialenterprisesinwaste-to-energyCompany Country SolutiondescriptionAbellonCleanEnergy

India,Canada,Ghana,Italy

AbellonCleanEnergyisinvolvedincollectionofmunicipal,industrial,agriculturalandforestwasteandconvertingthemintodifferentformsofenergy(solidfuel,liquidfuel,gaseousfuel).

AgroBiogenics India AgroBiogencsrecyclesfoodmaterialssuchasprocessedfoodsandfodderandnon-foodresourcessuchasengineeredcompositesandproductstobio-energy,bio-petrochemicals,bio-fertilizersandbio-water.

AnkurScientificEnergyTechnologies

India AnkurScientificEnergyTechnologiesconvertsagriresidues(e.g.corncobs,jutesticks,coconuthusk,ricehusk,coffeehusk,groundnutshells)intoenergythroughbiomassgasification.

(B)energy Germany,Ethiopia,Sudan

(B)energyconvertsorganicwaste(animaldung,kitchenwaste,humanfaeces,agriculturalresidues)andliquidwaste(water,wastewater,urine)tobiogasandfertilizer.Itsuppliesbiogasproductionunit,whichissemi-mobile,quicktoinstallandaffordable.

BiotechIndia India Biotechisengagedintheimplementation,promotion,popularizationandresearchinbio-wastemanagement,non-conventionalenergyandenergyconservationprograms.

BrightEnergyAfrica

Tanzania BrightEnergyAfricaproducesanddistributesbiomassbriquettesfromagriculturalwasteandusesyouthandwomenasbriquettesalesagentsintheircommunities.Thecompanyofferstraining,kilnleasingandbriquettingtechnologyforfarmersaswellasmarketingsupportforretailers.

CaribShareBiogas

Jamaica CaribShareisasocialenterprisethatconvertsorganicwastefromhotelsandfarmsintobiogastoproducecleanenergyandtohelpservethedevelopmentneedsoftheCaribbean.

CleanIndiaVentures

India CleanIndiaVenturesmanufacturesre-processorstoproducevaluableproductsfromwaste.Thewastere-processorsupcyclemostoftheorganicwastelikegardenwaste,templewaste,kitchenwasteandvegetablewasteintoorganiccompostandliquidfuel.

39 http://www.financialexpress.com/economy/policy-gap-stops-investors-from-expanding-power-grids-in-rural-india/183909/

April2017/14

Habona Rwanda HabonacollectswasteandconvertsittoBiogasandBiomassBriquettesandsellsthemtolowerincomepopulationsataffordableprice.

HuskPowerSystems

India HPStakesagriculturalwaste,ricehusksotherwiselefttorot,andconvertsitintogasthatpowersanoff-the-shelfturbinetogenerateelectricity.

KampalaJellitoneSuppliers

Uganda KampalaJellitoneSuppliers(KJS)isUganda'sfirstproducerofbriquettesmadefromagriculturalwastesthatincludessawdust,peanuthusksandcoffeewaste.

RuralRenewableUrjaSolutionsPvt.Ltd.

India RuralRenewableUrjaSolutionsmakesbiomassbriquettesusingforestresidues.(Thesebriquettesarethensuppliedtobrickkilnsmanufacturers,boileroperatorsforsteamgeneration,andfoodprocessingindustriesthatusecoalforheatingpurposes.

SamuchitEnviroTechPvt.Ltd.

India SamuchitEnviroTechofferscustomisedbiogasplantsforkitchens,forconvertingkitchen/foodwasteintocookingenergy.

SchutterEnergyLtd(Takamoto)

Kenya SchutterEnergyisasocialenterprisethatdesignsandmanufacturesbiogassystems,whichalsogeneratequalitybiofertilizer.ItsellsbiogassystemunderthebrandnameofTakamoto.

SustainableGreenFuelEnterprise(SGFE)

Cambodia SGFE(SustainableGreenFuelEnterprise)workstoreducedeforestationandimprovewastemanagementinurbanareas,bydevelopingalocaleconomicactivity:manufacturingcharcoalusingorganicwaste.

SimGas Netherlands,Kenya,Tanzania,Rwanda

SimGasoffersarangeofbiogasdigestersandappliancessuitablefordifferentsituationsandrequirements,fromhouseholdstosmallenterprisesandinstitutions.Itsfarmwastesystems(GesiShamba)aredesignedforlivestockfarmerssuchascattleholders

SistemaBiobolsa Mexico SistemaBiobolsaisasystemthatconvertsmanureintobiogasandnaturalfertilizers.

SkyLinkInnovations

Kenya Offersbiogasdigestersforhouseholds,schoolsandprisonstoconvertlatrinewasteintocookinggas,therebyalmosthalvingtheamountoffirewoodtypicallyused.

SustainableTechnologies&EnvironmentalProjectsPvt.Ltd(STEPS)

India STEPSprovidesmanagementanddisposalofunsegregatedwasteatsourcethroughthePolycracktechnology.ThePolycrackreactortreatsunsegregatedgarbageandconvertsitintogas,oilandcarbon.

FurtherReadingGlobalWasteManagementOutlook,UNEPhttp://www.unep.org/ietc/Portals/136/Publications/Waste

percent20Management/GWMOpercent20report/GWMOpercent20fullpercent20report.pdfISWAGuidelines:WastetoEnergyinLowandMiddleIncomeCountries

http://www.waste.ccacoalition.org/document/iswa-guidelines-waste-energy-low-and-middle-income-countries

Biomassbriquettesandpelletshttps://www.ashden.org/briquettesBiogashttps://www.ashden.org/biogasBiomassGasificationhttps://www.ashden.org/biomass-gasificationBiomassBriquettes:TurningWasteIntoEnergyhttp://biomassmagazine.com/articles/5148/biomass-

briquettes-turning-waste-into-energyWaste-to-EnergyFacilitiesProvideSignificantEconomicBenefits(Whitepaper)

https://swana.org/portals/Press_Releases/Economic_Benefits_WTE_WP.pdf

April2017/15

OperatingModelCambodiahasoneof theworst ratesofdeforestation in theworld. It lost2.9millionhectaresof forest (14percentofitslandarea)from1990to201040.MuchoftheCambodianeconomydependsonwood,fortimber,heatandpowergeneration,andabout80percentofhouseholdsusewoodorcharcoalforcooking.Moreover,Cambodiaisfacedwithanacuteshortageofelectricity(60percentimportedin2012)andregularpowercuts.Asa result, theGovernmentofCambodia licensesandencouragesprivategenerators, including thoseusingwoodgasifiers.Thecharfromthegasifiersiscurrentlyconsideredaswaste.SustainableGreenFuelEnterprise(SGFE)istryingtosolveboththeproblems—lackofcleancookingenergyandimproperdisposalofwood-charfromgasifiers.

40 https://www.ashden.org/files/case_studies/SGFE percent20case percent20study_0.pdf

CASE STUDY: SGFE

ThisseriesonInclusiveInnovationsexploresbusinessmodelsthatimprovethelivesofthoselivinginextremepoverty.EditorsareElaineTinsleyandNataliaAgapitova.ResearchedanddevelopedbyIntellecap.

April2017/16

SGFE is a social enterprise that started in 2008 as a result of a jointprojectoftwoNGOs—GroupforEnvironment,RenewableEnergyandSolidarity (GERES), which was the technical partner, and Pour unSourire d’Enfant (PSE) which was the social partner. It became anindependentprivatecompanyin2012.Sincethen,SGFEhasgraduallyachievedfinancialsustainability,breakingevenin2013andmakingaprofitin2014.SGFEproduceshigh-qualitychar-briquettesfromwaste,replacingtheneedforwoodcharcoal,andthusreducingdeforestation.Itpurchasesbiomassmaterials, which would otherwise go to waste landfills, and converts them into high-quality char-briquettesthataresoldasadirectreplacementtoconventionalcharcoal,forcookinginhomesandrestaurants.The enterprise currently uses char waste from wood-fired electricity generation, which SFGE buys frombusinessesthatrunthegenerators,andcoconutshells,whichSGFEbuysfromtradersandconvertsintocharinitsownclean-burningkilns.Becausecoconutcharmakeshigherqualitybriquettes,SFGEhasalsostartedsellingcoconutshellstosomeelectricitygenerators,withabuybackarrangementfortheirwastecoconutchar.41SGFE delivers about 30 percent of its production to retailers and 40 percent torestaurants and food stalls. The remaining30percent isboughtdirectly from thefactorybycharcoaldistributersforre-sale.Around100shops,manyofwhichusedtosellcharcoal,nowsellSGFEbriquettes.Around150restaurantsandfoodstallsusethe briquette. SGFE leverages tuks-tuks42 to distribute and advertise its products. SGFE’s most effectivemarketingstrategyisprovidingfreetrialsamplestorestaurantsanddistributers.Itcreatesawarenessamongfamiliesthroughfocusgroupdiscussions43.FinancialSustainabilityIn2014,about53percentrevenueswerefromsalesofproductsandservices,28percentfromgrantsand19percentfromsalesofcarboncredits44.However,SGFEhasprogressedonthepathoffinancialsustainabilityfromcoreoperationstoachieve98percentrevenuesfromsalesandonly2percentfromthesaleofcarboncreditsin2016.Ithasnotappliedfororrecievedanygrantsthisyear.ThemajorcostcomponentsforSGFEincluderawmaterialandhumanresources.SGFEproducesitstopbrand‘Diamond’briquettesonlyfromcoconutchar,and‘Premium’brandfrom5percentcoconutcharand95percentcharresidues.Bothhavehighercarboncontentthantraditionalwoodcharcoal,and produce more heat per kg. In addition, both contain less volatile material and less ash content, andtherefore,producelessairpollution.AlthoughthepricesofSGFEproducedbriquettesareslightlyhigherthanthoseofthetraditionallyusedcharcoal,thebriquettesburnforalongertimeduetotheirhighercalorificvalue.Thisreducestheaveragecostfortheconsumervis-à-vistraditionalcharcoal(seetablebelow)

Type Priceperton Combustiontime Averagecostperday45

41Waste biomass like coconut husks and shells are burned for two hours in refractory brick kilns until the material is carbonized. The production process has been modified to be as energy efficient as possible; the kilns used to carbonize the coconut and biomass ensure efficient combustion, reducing the emission of harmful gases and air pollution. The energy generated by the carbonization process is recovered and used to increase efficiency. 42 Three-wheeler public transport 43 Primary interview with SGFE 44 https://www.ashden.org/files/case_studies/SGFE percent20case percent20study_0.pdf 45 Assuming 1.5 kg and 2 hours use per day on an average, as per the information obtained through primary research

Over 80 percent of the population in Cambodia still uses biomass (wood or charcoal) for their daily cooking purposes. Charcoal is used primarily in urban areas (by 32 percent of the population), where the poor families use charcoal because alternative cooking fuels as LPG are very expensive (USD 1.25/kg)

The sale per month presently is around 90 tons of briquettes

SGFE’s current production is equivalent to the total cooking needs of about 2,500 households or about 12,000 people

April2017/17

Premiumbriquette USD300-350 2hours USD0.45–USD0.6Diamondbriquette USD750 5hours USD0.5–USD0.6Traditionalcharcoal USD250–300 1hour USD0.75–0.9

SGFEhasreceivedUSD0.3milliongrantfromtheSparkFundoftheGlobalAllianceforCleanCookstoves.Itisalsointheprocesofraisingequityinvestmenttoscaleupproductioncapacityandexpandtooverseasmarkets.AstheeffectivepriceofSGFE’sbriquettefuelissameorbelowthepriceofwoodcharcoal,itishighlycompetitiveresultinginalowsubstitutioncostfortheconsumer.SGFE’sprofitsarereinvestedintothecompany’sassetsandfairlydistributedamongtheemployeestomaximizesocialimpact. ImpactSGFE char-briquettes are 100 percent recycled biomass, have a longer burning time (higher fixed carboncontent), theymake no sparks (which can cause domestic fires), make no smoke (which cause respiratorydiseasesinindoorcooking)andcomealreadyinasmallcut,easy-to-usesizeandshape.Thebriquettesarelessfragile,sotheyareeasierandcleanerforbothusersandtraderstohandleandstore.Attheendoftheday,anyremainingfuelcanbeextinguishedinanair-tightcontainerandusedagainthenextday.Eachtonofchar-briquettesreplacestheuseofabout10maturetrees(7tonsofdrywood).Withitsmonthlysalesexceeding100tons,SGFEsavesover700tonsofwoodpermonth,whichisnotcutfromCambodia'sforestsandreducesCO2emissionsforalmost20,000tonsperyear46.UsersofSGFEbriquettessavearoundUSD60peryear,becausethebriquettesproducemoreheatandlesswastethanwoodcharcoal47.Greenhousegasemissionsarecutbyreplacingnon-sustainablewoodwithbiomassfromwaste.Theyarereducedfurtherbytheuseoftop-lid-updraftgasifier(TLUD)kilns,whichcuttheemissionofnon-CO2greenhousegases.

SGFEalsogeneratessustainablelivelihoodsbyemployingfactoryworkersfromtheinformalsector.Theworkersarefromfamiliesthatsortwasteonrubbishdumpsanddonothaveformalemployment.Theseworkersareselectedthroughachildren’scharitycalledPourunSourired’Enfant(PSE),whichensuresthatthechildrenoftheseworkersareenrolled inPSE-supportedschools.SGFEpaysasalaryofUSD150-200permonth,andanadditionalUSD25-30onhealth insuranceandbonuses. SGFEandPSEworktogethertoprovidejobandlifeskillstrainingtotheemployees. Inaddition,SGFEoftenhostsfactoryvisitsforCambodian and international school and university students,with the aim of increasing awareness about clean energy,environmentalprotectionandsocialinclusion48.ChallengesandLessonsSGFEstarteditsoperationsinJanuary2010,andbytheendof2011,SGFEwasalreadyfacingtheriskofclosure,sincethefoundingNGOs,whoweresubsidizingSGFE'sfinances,hadterminatedthebudgetdedicatedtotheproject.Thecurrentowner(Mr.CarloFigàTalamanca)tookSGFEover inJanuary2012totrytosave it fromclosure.Throughproductionmanagement,renewedmarketingstrategiesanddevelopmentofitssupplychainanddistributionsystem,SGFEsucceededinbreakingevenwithin2years,increasingproductionandsalesby10-

46 https://www.ashden.org/files/case_studies/SGFE percent20case percent20study_0.pdf 47 Primary research 48 http://www.wame2015.org/case-study/1109/

1kg of SGFE char briquettes has the same energy content as 1.1kg of traditional wood charcoal. 6kg of wood are needed to produce 1kg of charcoal. Therefore, using 1kg of SGFE char briquettes instead of traditional wood charcoal results in saving up to 6.6kg of wood from Cambodia’s natural forests

SGFE has onboarded 24 people, who used to work as waste pickers on the municipal landfill sites with improper working conditions, as employees

April2017/18

fold,from5to50tons/monthby2014.Inthefollowing2years,SGFEwasabletogrowby100percentagain,reachingproductionandsalesof100tons/monthin201649.RoadAheadSGFEhasbeenabletoincreasetheproductioncapacityupto135tonspermonthinitscurrentlocation.Theprojectedsalesofbriquettefor2016is850tons,whichwillreducecarbonemissionofaround14,000tons50.SGFEislookingtoexpanditsproductioncapacitybybuildingabiggerproductionplantthroughcapitalinfusionbyanimpactinvestor.SGFEalsoplanstoexpandgeographicallytoAfricabyexploringafranchisemodelbasedonequity,inwhichitwillprovideinitialcapitaloutlayandtechnicalassistancetowaste-to-energyfirmsinreturnforequity.

49 Primary interview with SGFE 50 Primary interview with SGFE

April2017/19

OperatingModelWorldwide,3billionpeoplegetexposed to toxic fumes, fuels anddangerousopen fireswhile cooking theirmeals51.Thedirectconsequencesofinhalingtoxicfumescause4millionpeopletodieeachyearoflungcancer.InEastAfrica,cookingoncharcoalandwoodisthenumber-onecauseofdeath,evenbeforeHIV/AIDSandmalaria. Mostly women and children are victims of toxic gasses inhaled when burning fires indoors. Also,deforestation,drivenbyahighdemandforwood,depletesAfrica’sforestcoverby1percent-2percentperyear.CO2emission,causedbytraditionalcookingmethods,aggravatesthegreenhouseeffectfeltaroundtheworld.Biogasisacleancookingfuelandcanaddresstheseproblems.However,conventionalbiogassystemsinEastAfricaarelarge,expensiveandcumbersometobuild.SimGas,awaste-to-energyenterprise,hasintroducedasmall-scaleandmass-produciblebiogassystemthatispre-manufacturedandadaptedforhouseholds.SimGasbiogassystemsare fully integratedfarmsolutions, targetedatsmallholder farmers.Thesystemusesanaerobicdigestion,wherebacteriaworksymbiotically toconvertorganicwaste intobiogas.Slurry thathasbeenfullydigestedexitsthebiogassystemintheformoforganicfertilizer.Thebiogasthatisproducedisacleanfuelthatcanreplacewoodfuel,charcoalandkeroseneforcookingandotherenergyneeds.Theinstallationofthepre-fabricatedkittakesonedaycomparedtosixman-weeksforaconventionalsystem.

51 Africa Carbon Forum

CASE STUDY: SIMGAS

April2017/20

SimGasproductsaremadefromrecycledHDPEplasticandmodular.Theycanbescaledfrom2m3to25m3(in1m3increments)forfarmerswith1to30cows.SimGasdistributesthesystemsthroughretailers,andpartnerswith local institutionsandevents likechurchestocreateawarenessabouttheproducts.At thetimeofsale,SimGasadvisesfarmersonthesizeofbiogassystemtheyshouldgoforbasedonthespecificsituation,likethenumberoffarmanimals.SimGashasanetworkofcustomerservicecenters,inadditionto8officesinKenyaand4officesinTanzania.Therearelocalsalesofficerswhosellwithin20kmradiusandalsosupportintheafter-salesservice.SimGashas11employeesintheNetherlandsandaround60employeesinKenyaandTanzania.ThedigestersaredevelopedanddesignedbySimGasBVintheNetherlandsandlocal partners and experts. SimGas is also supported by a number of majorbusinessesandfarmersupportorganizations,includingCRDB,NMB,HEIFERandTangaFreshLtd.ItalsopartneredwithKenyaBureauofStandardstoco-developthe standards on energy. In addition, SimGas has joined the Africa BiogasPartnershipProgram(ABPP),aPPPledbyHivosandSNVinsupportingnationalprogramsondomesticbiogas.Thenationalbiogasprogramsprovidetrainingtotechniciansoninstallationofbrickandcementsystems.SimGasleveragestheseskilledworkersforinstallationofSimGassystems.SimGasispaidonthebasisoftheresults,whereintheoutcomeisatargetofinstallingacertainnumberofbiogassystemsinastipulatedperiod.SimGashasalsoenteredintoasimilarstrategicpartnershipwithTanzaniaDomesticBiogasProgramtoinstallthebiogasdigestersystemsinhouseholds.FinancialSustainabilitySimGas incurred an initial fixed investment (capital expenditure) of about USD 1.3million on setting up itsfactory.Manufacturingthesystemsconstitutesaround50percentofthecostswhiletheremaining50percentwereincurredontransport,staff,installationandothermiscellaneouscosts.Itearnsrevenuesfromsellingthebiogassystemthatcomprisesofcookstovesandothercomponents.SimGasbiogassystems(includingbiogasstoveofaround5cubicmetres,installationmaterials,usertraining,delivery&installation,aftersalesservice,anda2-yearwarranty)arepricedatUSD500–1000,varyingwithdifferentcountries(duetotransportcosts)andthesizeofthe systems. Price of SimGas biogas systems are lower than that ofcompetitors.However, the sellingpriceof SimGas systems is slightlyhigherthan the prices of Government-promoted biogas systems because theGovernmentdoesnotchargeinstallationcosts.However,thematerialcostsofSimGassystemsis lowerthanthoseoftheGovernment-promotedsystems.SimGashassignedanEmissionsReductionPurchaseAgreement(ERPA)withWorldBank’sCarbonInitiativeforDevelopment(Ci-Dev)onthepurchaseof500,000CertifiedEmissionReductions(CERs)—commonlyknownascarbon credits—generated by SimGas’ biogas systems in Kenya. Theemissionreduction iscalculatedbasedontheemissionof thereplacedenergysourceslikecharcoalandwoodfuel.Thus,thisadditionalrevenuestreamservesasasubsidy(anaverageof8carboncreditsaresoldpersystem), loweringtheretailpriceofbiogassystemsforhouseholdsandthereby increasing the affordability of these systems to these families.SimGas isalsoabletoextendthewarrantyonbiogassystemsfrom2-3years to 5 years, thereby increasing customer confidence in SimGas’systems. It expects thedigesters tobeboughtbyaround80,000households initially inKenya,whichwouldotherwiseuse3-7tonsayearoffirewoodtocook,muchofitfromunsustainablesources.

SimGas has sold 1000 bio-digesters to rural farmers and 1000 systems to urban customers

SimGas has sold 1000 bio-digesters to rural farmers and 1000 systems to urban customers without cattle

The sale of greenhouse gas reduction credits by Ci-Dev at a price that is higher than the market price of USD 1-2 enables SimGas to discount the prices of its biogas systems

April2017/21

SimGashasreceivedequityanddebtcapitalfromimpactinvestors,andhasalsowonawardssuchastheOpenIDEOandEmpoweringPeopleAwardfromtheSiemensFoundation.Theexternalfundingandthecarboncreditsprogram help SimGas to remain sustainable, though profitability is limited because it is a triple-bottomlinecompanyandmaintainingaffordabilityforfarmersisimportant. ImpactBiogasnotonlytakesawaythehealthhazardsofindoorairpollution,butalsosaves time (about 2-4 hours a day. Using biogas lowers household energyexpenditureandmakeshouseholdsindependentofunreliableornon-existentpowergridsdisbursal.Globally,anestimated18millionacresofforestarelosteachyearforfuelwood.Replacingwoodfuelbybiogasreducesdeforestationand helps to lessen global greenhouse gas emissions. SimGas canmeasure impact by remotelymonitoringsystemperformanceandcarbonemissionreduction.Cookingonbiogasreducescarbonemissionwith5-10tonCO2equivalentperhouseholdperyear.ThisisaboutasmuchCO2asanaveragepassengercaremitsintwoyearsandtranslatesintoenergysavingsofaroundUSD80-300perhh/year,dependingonpreviousfueluse.ChallengesandLessonsOperationalexpensesinhiringstaffandinstallationtechniciansarehurdlesfortheexpansionofSimGas.Ithasfacedsometechnicalchallengesinavailabilityofelectricityforproductionandmaterials.Consumerfinancinghas alsobeena challenge; SimGas initiallyworkedwithMFIs, but thearrangementdidnot lastdue tohighinterestratesandcomplexityoftheproducts.RoadAheadSimGasplanstoexpandtoEastAfricaincountriessuchasUganda,Zambia,Ethiopia,andalsotoSouthAsiaincountries suchas IndiaandBangladesh,wherepeople requirecleanenergy solutions.SimGasalso plans tointroduceapay-as-you-go/lease-to-ownmodelforitsproductsbysettinguparevolvingfund.SimGasalsoplans to introduce twootherproducts. It isdevelopingabiogas-basedmilkchillingmachine forfarmers that will provide off-grid biogas-poweredmilk cooling on-farm, allowing smallholder dairy farmerswithoutaccesstoelectricitytostore,deliverandsellthehighestpossiblequalityofrawmilk,andincreasetheirincome.SimGasisalsodevelopingasafebio-sanitationsystemtoconverthumanfaecestoenergyandimprovehealthandhygieneforschoolsandinstitutions.

Production of organic fertilizer from the biogas slurry also increases average yield of farms by 15 percent - 25 percent