Retrospective on Energy as a Service

Matthew Carney - Ross School of Business & School for Environment and Sustainability

Namaste! With my internship now over, it’s a perfect chance to reflect on my summer and how my first year at Michigan led to this opportunity. Like many students, I came to Michigan without a firm idea of where exactly I wanted to go professionally. I knew I wanted to do something in the realm of sustainability, but I struggled to decide which problem I wanted to focus on. Renewable energy? Clean water? Waste? Poverty? Forest degradation? These were all significant areas to focus on, but I still felt like I hadn’t quite scratched my itch.

Thankfully, my vision became clearer as the year wore on and I began to reconsider energy not as a product to be sold - but a service to be provided. Working with institutions like the William Davidson Institute helped me understand that we shouldn’t limit ourselves to thinking that the benefits of renewable energy are realized when the lights turn on. Particularly in emerging markets, new sources of renewable energy can have a significant positive impact beyond reducing carbon emissions.

Subsistence farmers in rural Nepal provide a stark reminder of this fact. These farmers spend hours each day farming their land by hand, and struggle to produce enough crops to feed themselves - much less sell for profit. Additionally, tasks such as irrigating land and grinding crops into flour are extremely manual labor-intensive and incur significant opportunity costs due to how time-consuming they are.

Access to solar-powered mechanization can help these farmers in numerous ways. First, improved agricultural productivity means that farmers can produce more crops with less effort, ensuring they not only have enough food for themselves but also have crops they can sell to earn income. Secondly, reducing the number of manual labor hours needed to tend the farm leaves individuals, particularly women and children, free to pursue other income-generating opportunities. From an environmental perspective, the adoption of modular solar power can also meet these farmers’ needs while reducing the incentive for capital-intensive, environmentally unfriendly electrification infrastructure projects.

Overall, I was very lucky to spend my summer working with a company that helped me see the positive trickle down effects energy access can have in emerging markets. I’m grateful for the experience WDI provided because I know this experience will provide a new lens for how I approach the upcoming year at Ross and my career interests.

Defining Entrepreneurship in Nepal

Matthew Carney - Ross School of Business and School for Environment and Sustainability

One of the most eye-opening aspects of working with entrepreneurs in emerging markets like Nepal is the degree to which the very concept of entrepreneurship differs from what is taken for granted in the United States. In America, most startups follow a familiar game plan; identify a robust market, disrupt existing firms by offering new services, scale up efficiently to maximize market share, and ultimately try to go public or get purchased by a larger competitor. Having spent six weeks working with energy entrepreneurs in Nepal, it is already clear how foreign this concept of “entrepreneurship” can be. In particular, this manifests in three distinct ways.

First, the basic infrastructure that undergirds our domestic economy is often taken for granted. For example, the CEO of a new software or direct-to-consumer apparel company will know they can count on ubiquitous internet access and expansive highway system to deliver those products. Local entrepreneurs in emerging markets have no such privileges.  When considering potential targets for decentralized solar power systems in Nepal, the realities of limited infrastructure not only hinder the entrepreneur but also the customer.

Secondly, entrepreneurs in emerging markets tend to rely on partnering with nominal competitors much more than those in the US. While most startups in America focus singularly on expanding and protecting their market share at the expense of their competitors, resource limitations in developing countries necessitate collaboration. Given how many people simply don’t have access to the market, working together connect with potential customers is worth the effort even when each company’s individual market share is diminished.  

Both of these factors are evident in the different approaches taken to scaling. American startups are often judged by their ability to add customers and increase revenue while keeping their marginal costs low. For example, it won’t cost twice as much to run a social media app with one million users as one with half a million. For energy entrepreneurs in emerging markets, however, each project must be profitable on its own and costs largely correspond to earning potential. Given the limits this imposes on startups’ potential profitability, it can make it much more difficult for entrepreneurs to attract outside investment - limiting their prospects from the outset.

The stark difference in constraints and opportunities between American and Nepali startups provides a learning opportunity for entrepreneurs of all stripes. It is an important reminder that the skills that makes an entrepreneur successful in one context may not be applicable in another.

Realizing Solar's Potential in Rural Nepal

Matthew Carney - UM Ross School of Business & SEAS

This summer I'm working with the solar startup Ecoprise to help bring solar-powered agricultural services to subsistence farmers in the Terai region of Nepal. As I write this, farmers in rural Nepal are preparing for the approaching monsoon season. Nearly two thirds of Nepal’s working population is made up of farmers, who rely extensively on the rainy summer season for irrigation given Nepal’s isolating topography and lack of infrastructure. Even with significant rainfall, rural farmers have difficulty maintaining their farms due to the high costs associated with pumping groundwater. This loss of productivity often prevents farmers from breaking out of a cycle of poverty. Thankfully, the emergence of solar- powered agricultural services could help reverse this trend and ensure that rural farmers can cultivate their land year-round.

In Nepal, only 40% of the country’s population - mostly in urban areas - has reliable access to electricity. In rural areas, that falls to a staggeringly low 5%. Despite this, Nepal benefits from more than 300 days of sun per year. The combination of Nepal’s natural solar capacity, plus its lack of electrical infrastructure in rural areas, makes it a prime target for solar-powered agricultural services.

In 2015, Ecoprise partnered with the International Center for Integrated Mountain Development (ICIMOD) and SunFarmer - two nonprofits operating in Nepal - to provide photovoltaic (PV) panels water pump infrastructure projects in the Terai region district of Nepal. The sites were monitored over the course of the following year, with increasingly positive results. By using the solar-powered water pumps these farmers were able to irrigate 24% more land during the winter months and 29% more land during the monsoon season. It also reduced the use of diesel- powered water pumps by 75% - saving the average farmer ~$500 per year.

Despite these encouraging signs, there is quite a distance yet to go. The farmers that participated in this pilot program tended to have more land, better access to irrigation, and own more pumps than the average Nepali farmer. In order to ensure equity of access, it will be critical for private enterprises and non-profits to work together to ensure solar-powered agricultural solutions can be made affordable for the farmers that could benefit most from the technology. Solar-powered agriculture presents an opportunity to raise the living standards of millions of rural Nepali farmers in a sustainable fashion - it would be a shame to waste it.