Tips for Private Sector Engagement for Energy Access in Humanitarian Settings

Energy access for refugees is firmly set on the humanitarian agenda. Momentum gathered around the launch of the Global Plan of Action for Sustainable Energy Solutions for Situations of Displacement in 2018 and was cemented last December when Clean Energy Challenge (CEC) was announced at the first Global Refugee Forum. The challenge aims to make sure that “[a]ll refugee settlements and nearby host communities will have access to affordable, reliable, sustainable and modern energy by 2030”.

UNHCR will not be able to deliver on this commitment alone. The agency describes its own role as that of an ‘enabler’, seeking partnerships with other stakeholders in order to deliver the urgently needed response and doing so through market-based approaches “[…] to build sustainable private sector solutions, and develop local market capacities.” 

However, the humanitarian sector does not have much experience doing this.

 

Three lessons learned in Kenya and Rwanda

1. Creating markets and engaging the private sector requires long(er) term thinking

Humanitarian organisations have a short-term focus due to the nature of their mandate: to address crises quickly and effectively. But the evidence shows that building sustainable markets where private providers can establish themselves and thrive need longer-term approaches. In early 2018, Bboxx- a next generation utility company providing off-grid solutions in several markets across Sub-Saharan Africa, partnered with the Moving Energy Initiative (MEI) to pilot the sale of Solar Home Systems in Kakuma camp, Kenya. As Bboxx already had an established presence in Western Kenya and were keen to expand to other parts of the country, this was a great opportunity to kick start them in Turkana, while at the same time serving a vulnerable population in need of energy access. The programme provided financial support to ‘set up shop’ and cover additional logistics costs due to the remoteness of the camp’s location, marketing and the purchase of 75 units. The pilot was scheduled to run for six months and, despite encouraging results at the end of it, the financial support ceased. This left Bboxx with a choice to either continue operations ‘on their own’, even though they had not yet reached scale which would ensure financial viability, or withdraw from Kakuma.

Sustainability of programmes and partnerships lies in a good understanding of contexts and stakeholders’ needs, and in building relationship to facilitate a smooth launch and running of operations. Reaching scale is a challenging feat, especially in remote camps where the market is limited given the relatively small host community size, and it requires time. Programmes that do not offer sufficient support and lack long-term viability prospects for market creation can deter private sector companies from engaging.

Off-grid solar companies and providers of cooking solutions, particularly those operating on pay-as-you-go or utility models, cover the initial capital costs. It takes between three to five years, or more, to recoup that investment. So, they rely on building long-term relationships building with customers who pay for their products and services over time. For example, Inyenyeri, a clean cooking company, piloted their solution in a refugee camp in Rwanda. Households received (free) access to a clean (and expensive) cookstove if they purchased a minimum amount of fuel every month. The upfront investment in the stoves will only be recouped through years of consistent fuel purchases. This makes the relationship with customers essential, and a short-term engagement would not make financial sense.  

Ample time periods must be built into the programmes to give companies enough security to give it a go and be willing to take the initial risk. If not, private companies will look elsewhere and move away from humanitarian contexts. 

 

2. All parties must be committed to continuous communication and learning

This is a new territory to navigate for everyone and open communication is essential. The humanitarian sector and host governments must be clear on the policy environment for private operators, and the private sector must be clear on what’s working and what’s not.

In the experience of Bboxx and Inyenyeri, the relationship between the companies, the humanitarian agencies and the government is critical for success and for the ability to adapt and learn from one another. Inyenyeri’s pilot with 100 refugee households showed that despite their willingness to pay for clean energy, their ability to pay remained low and would be insufficient to achieve the scale needed for the business to break even. UNHCR and Inyenyeri fundraised together for an innovative ‘cash for energy’ program, whereby UNHCR would transfer cash to refugee families in order to be able to afford Inyenyeri’s clean cooking solution. The willingness of UNHCR to try something ‘new’ was beneficial to both partners – Inyenyeri could sell more fuel to refugees while aiming to create a sustainable business model, and UNHCR was providing access to a clean cooking solution to the refugees under their protection.

That being said, humanitarian agencies do not have the expertise or capacity to create market conditions for energy services as their mandate has not been to act according to a development perspective. But development partners and programs, such as EnDev, do. The role of each partner therefore – be it humanitarian, development, private or government – needs to be clear, with communication and coordination being crucial at every stage.

 

3. Overcoming the ‘clash of cultures’ is a task for all

Unsurprisingly, the ‘languages’ and standard operating procedures of humanitarian and private sector actors differ immensely. Bridges to build mutual understanding and find a middle ground are needed.

Inyenyeri found that there was no possibility for UNHCR to contract the private sector beyond their usual ‘procure and supply’ model. The lack of options to create partnership agreements between UNHCR and the private sector results in administrative burdens which slow down the process of launching operations in the camps, discourage private sector providers and hinder innovation.

The way forward: top tips for working with private actors

• Moving away from crisis thinking for energy services in humanitarian settings, particularly in protracted situations, can help bring about longer-term thinking and planning and make it easier for private actors who want to be in it for the long run.
• Humanitarian actors should consider engaging development partners with experience in long-term programmes, such as GIZ, DfID, SNV. This could boost companies’ trust in programmes and ease the need to steer through complex procurement frameworks in humanitarian agencies.
• Learning from rural electrification programmes can help not reinvent the wheel. Private sector providers and development agencies have had success reaching millions of unelectrified households in Sub-Saharan Africa. Lessons can be drawn from these partnerships to inform the design of humanitarian energy programmes to avoid common mistakes.

 

About the authors:

Dr Iwona Bisaga is a Research Consultant with Chatham House and a Post-doctoral Researcher at the University College London. She was previously the Research Manager at Bboxx where she supported the post-MEI operations in Kakuma (Kenya) and Bboxx’s participation in the (ongoing) RE4R programme in Rwanda with Practical Action and other partners. 

Suzanna Huber is an energy policy advisor with NORCAP – the Norwegian Refugee Council’s provider of expertise to the humanitarian sector. From 2015 – 2018, Suzanna set up Inyenyeri’s refugee program with UNHCR in Rwanda, providing a truly clean cooking solution to refugees through an innovative business model.