I would like to start our next session of the International Development Select Committee looking at UK aid for community-led energy. We have two panels today. I ask the first panel to introduce themselves and their organisation. We have two people virtually and one in person. Melita, you are in person so let us ask you first. Tell us who you are and who you are representing.

My name is Melita Lazell. I am an Associate Professor in Political Economy and Development at the University of Portsmouth. With my colleague, Ivica Petrikova at Royal Holloway University, we have evaluated a number of UK aid funded projects in Nepal, Nigeria and Kenya; interviewed former DfiD and current FCDO staff about the merger and impact of that; looked at broader ODA trends and also assessed the links between UK domestic policies and what is happening with international aid. I give a more high-level, broader view and assessment than maybe some of the other participants, who have more fine-grained detail about projects and programmes.

Why do we not let them answer for themselves? David, could you introduce yourself and your organisation, which is well-known to this Committee?

Absolutely. Thank you for having me. My name is David Nicholson. I am the Chief Climate Officer for Mercy Corps. Mercy Corps is a global humanitarian and development organisation. We are currently working in around 40 countries worldwide and focus on supporting communities facing conflict and climate change and other kinds of crises. As the Chief Climate Officer my job at Mercy Corps is to ensure that Mercy Corps’ work is as impactful as possible in the face of the climate crisis. Access to energy and access to clean energy is a major part of that initiative at Mercy Corps. When I joined Mercy Corps—12-plus years ago now—I came in as the lead for access to energy strategies. I have a long background at the organisation and prior when I worked in East Africa in the early wave of carbon finance on clean energy models there as well.

Thank you. Last but not least, Kate.

Great. Thank you so much for convening this meeting and for inviting Nithio to participate. I am Kate Steel. I am the Co-founder and CEO of Nithio. We are an investor in the energy access space. We offer receivables-backed financing to distributed energy companies looking to scale energy access across Africa. I also have a long background in energy access. I have worked in the field for close to 25 years now, focused largely on off-grid but also on-grid and moving back and forth between public and private sector.

Brilliant. Thank you all. We have a lot of questions so if I can ask you to give brief and direct answers. If there is anything you want to go into more detail on, put it in writing to us so that it gets into our report.

Hi everyone. Kate, this is a question specifically to you. Why do you think the world is currently not on track to meet SDG 7?

I will agree, I do not think we are on track to reach SDG 7, but we have made significant process. The problem is we are now down to the toughest-to-reach places. We frequently talk about energy access in terms of focusing on the scope of the problem in big numbers: 600 million to 800 million people who lack access to electricity in Africa or globally. If we flip that around, that is 10% of the world who continue to be off grid. Using rough numbers, there are 8 billion people in the world, and we have fewer than 1 billion who remain off-grid. Therefore, we are getting down to the toughest-to-reach places. That is where we see that it is harder to reach with some of the solutions we have used in the past. It is markets that are tougher. In some ways it is becoming a simpler problem because by 2030 I believe the estimate is that 90% of the people who are off grid will be in sub-Saharan Africa. That is largely concentrated in three markets: Nigeria, DRC and Ethiopia. Therefore, we are narrowing down where we can address the problem, but we need to accelerate efforts significantly in order to reach those people by 2030. It is always hardest to reach the last piece.

Thank you. How do you think the UK is contributing to this global effort at the moment? How do you rate its contribution?

It is really significant. If you look across the board at the investment programmes and the grant programmes, there is very comprehensive activity trying to bring in private sector investors such as ourselves. We have worked with other UK entities on that. There is a strong focus on technical assistance and policy, creating the right regulatory environment. The UK has been instrumental in building all of that up. The piece I would say is missing now—this is globally but the UK can be a participant in it—is that we have this fantastic private infrastructure in terms of the distribution model for off-grid energy especially and even how to do it from the grid scale as well. We have a lot of the financial infrastructure that is our commercial investors, such as Nithio. We are the pipes that feed those private providers. What is needed is more capital into those pipes. We would all love to see greater private sector participation and greater blended capital. However, because we are trying to reach the last mile, the ratio is shifting to where we are not moving to a more commercial model. We are going after the least commercial households. Greater concessional capital is probably what is needed at this point.

Melita, over to you. I have a string of questions for you. We have heard throughout this inquiry that UK aid has had a positive impact on improving energy access for local communities. Would you agree with this assessment?

There has been some positive impact. I definitely think there are some challenges with UK aid, particularly with trying to do the community-led access to energy programmes and community-led and local projects across the board. There are some challenges there where UK aid potentially could do better. It is difficult. There are some barriers in the way for the FCDO and other Departments, which spend aid, to take on board that localisation and that ownership agenda that is really needed for projects and programmes to be as successful as they can be. I could go into a bit of detail about what those challenges are but maybe that will come up later.

I can follow with the next question. If you recommend UK aid focuses on areas of relative strength, is energy access one of those priority areas?

It could be. I do not think it is particularly the area of strength at the moment. It is between 2% to 4% of the budget over the last five years of the ODA bilateral budget that has gone into energy-focused programmes. That is more in lower-and middle-income countries and the least-developed countries. That is something that Dr Steel was talking about as well, those really hard-to-reach places. Looking at the projects and programmes that have been funded by UK aid—if we just take 2023 when the last data that we have has been published—none of those resources were channelled through recipient-based NGOs and civil society groups, which is what we need to move towards if we want to embed that localisation. Most were led by the private sector. It can be channelled through research institutes or universities but even in the data when it says that is the institution, when you look a bit deeper it is normally private sector organisations and is often private companies that are registered in the UK as well. That can potentially be an issue, again, for ensuring that local communities are designing and manging projects and that we are prioritising local innovation, local knowledge and experience.

In a nutshell, what challenges or shortcomings have you observed in how UK aid approaches energy access?

This goes beyond energy access. There is some risk aversion, which is easy to understand when we are talking about spending taxpayers’ money when we are talking about spending UK aid. There is also a political element to that as well. If projects do not meet their targets or are not as successful as they could be, that can sometimes be weaponised by an anti-aid section of the press or whatever it might be. Therefore, there is, understandably, risk aversion to empowering local community groups and NGOs based in the global south to really develop and then manage the resources for energy access programmes. That is one of them.

Right, there are lots of questions. You have raised concerns that UK aid does not always sufficiently support local participation and ownership. Can you provide examples where this has been an issue in energy-related initiatives?

There are lots of examples, probably more examples than there are where localisation has been really embedded. I was thinking specifically of a project in Nigeria, which was an energy infrastructure and privatisation project that did not sufficiently take on board the end users of the energy. The outcome of that project, particularly the privatisation within the sector, did increase prices for consumers and did lead to job losses in the sector as well.

Can I push you a little bit on this? In the last session the witnesses were saying that unless the local community is very much involved in the development of the project, the risks around it failing are going to increase exponentially. Of the projects you have referenced—particularly the one in Nigeria you last talked about—was the primary motivation profits or was it getting electricity to vulnerable communities?

The primary motivation often for these projects is developmental but these projects have then been criticised as putting profits at the forefront.

Self-sustaining is one thing but the drive for profit is a different thing.

Yes, which can lead to poorer outcomes, to poorer developmental outcomes.

You have seen that?

Yes. In the projects we have evaluated, yes.

A long time ago I worked on microgrid development in South Africa and looking at the feasibility of off-grid microgrids with local management. There was someone onsite who had the technical capability who was able to manage the system. Quite honestly, that was more than 20 years ago, and I think a lot has changed in terms of what is available for remote management of the system, for mobile payments on the system. You need much less hands-on management, which means that I think it is more within reach for the community to manage it itself. I also do think there are some communities where it will not be a fit. A lot of the development has been very top-down in terms of looking for companies and ways to serve these households. There is probably a number of communities where a bottom-up approach will work. The goal is to identify who those communities are. It looks like David wants to come in on this as well.

This is such an important issue. There is a tendency to underestimate the capacity of community-organising ability. A lot of places where certainly Mercy Corps works on programmes that I have been involved with, the ability to organise and govern initiatives like this, whether they are access to energy or other types of community-level efforts, is pretty high. There are good examples where communities have been able to do that and certainly organisations like Mercy Corps, and many of our peers, can play a mentoring and support role. I do think those models exist. As Kate said, the ability to remote-manage some of the technical stuff—the true technical part of this, which is only a small piece of what is needed to see these models be successful—can be done remotely. It does create the opportunity to do that more and more.

I completely agree. The capacity already there at local level is often underestimated and is not utilised to its full potential. I think that goes back to that risk aversion I was talking about earlier. Where does accountability land for these development projects? It is domestic. This is taxpayers’ money, as we said. If we can have some accountability at that local level that would be really helpful. One other thing to add, the way we know that capacity is there and that projects would be able to draw on it is to have people who have a great, intimate knowledge of the political economy context, of the social economic context, in the places that they are. DfiD often did have those people. There is some concern now that that expertise has been lost over the past few years; that we have lost that expertise, the development expertise and also the local context expertise as well. That is going to make it more difficult to see and draw on that capacity that is already there.

Thank you. David, I will come to you, if that is okay? Despite growing global commitment to energy for all, what we are seeing is electricity access rates declining for displaced populations. Could you explain that in more detail? What are the key reasons we are seeing that?

It is a really good question. We are seeing slowed progress or even reversals in the access to energy numbers overall, which I am sure have been shared with you all. When we look at displaced communities particularly the numbers are very bad, it is over 90% that do not have access to reliable energy services. There are a few reasons for this. This is to Kate’s point earlier, the investments to date around access to energy have been focused at those more market-ready communities and customers. There is logic to that. Over recent times the obsession across the sector has been to drive more and more commercial capital because there is not enough public and philanthropic money. Therefore, we have to increase the proportion of private capital coming in and that capital demands a return, and the displaced customers are not seen as viable customers. It is harder and harder to drive the limited philanthropic and public money to those kinds of communities because it is harder to show that you can bring private money in afterwards. In many cases that perception is not in line with reality. A lot of who are classified as displaced people live in fairly dense communities, they have been there for decades or more at times and make pretty good cases for investment in access to energy. One quick example. Mercy Corps works in Ethiopia. We have been working for a number of years on demonstrating the off-grid, solar microgrid plus distributed energy services for internally displaced people and refugees inside Ethiopia. It is pretty viable. It is not purely commercially viable, but no energy systems are purely commercially viable. However, we are demonstrating that, with the right level of subsidy and the right level of public support, customers will pay. They will pay consistently, and they will use more energy than anticipated when that service is reliable and the price is fair so there are more opportunities there than are recognised. However, that perception and lack of attraction for commercial capital is a major barrier.

What needs to change then? Is it mind-set and understanding of the opportunity or are there other barriers to enabling greater access?

It is a little of both. My two colleagues have both touched upon this a little bit: there does need to be a greater appetite for risk. There is perceived risk that might be too high but there is real risk as well. There does need to be a greater degree of grant capital and highly concessional capital put into the mix to make these models work, there is no escaping that. The financial ratios available do need to change a little bit. Alongside that, we can do a better job of helping those few pilot-scale initiatives that are ongoing to scale up sufficiently to put forward good enough evidence to show the business case. We have a number of these quite small initiatives that have struggled to get the next level of money. It is very hard to make a case based on a single site. These single site efforts that might look pretty good need to get up to five, to 10, to 15 sites to start to get to a scale where we can produce enough evidence to hopefully move the needle a little bit on investment decisions.

I am going to come in on this risk point because this was largely why Nithio was founded. In some of my previous roles we have talked about, “We are going to prove that there is less risk than everyone thinks, focusing on the perceived risk, and that will unlock private sector capital to come in”. For Nithio, we focused on the repayment risk and being able to have superior analytics around repayment risk, not to show that there was no risk as you are selling a product to people who have, quite honestly, very limited ability to pay in certain areas. It is risky. Our premise was that you could better understand that, price the risk accordingly, and think about the capital mix and what portion of the market was commercial and try to bring in private capital only to that portion of the market and then focus more of the concessional and subsidy capital to the places where people truly do not have the ability to pay. It is that clear understanding of risk rather than saying, “Trust us. There is no risk, you can come in.” It is a risky market but that does not mean it is an un-addressable market.

That is helpful. Finally, David, for Mercy Corps, that balance between short-term humanitarian goals and the work you are needing to do and this longer-term community energy, climate-based investment, how do you balance the two? What objectives are you working to when making choices?

It is a real challenge. A lot of funding that comes to the likes of Mercy Corps will be labelled as humanitarian and then very short-term in nature. If we are talking about an acute crisis that is of course reasonable, and we do not know as things are dynamic and evolve quickly. However, a lot of “humanitarian settings” are protracted crises. We are working with displaced communities, but communities that have been there for a long time and will be there for the foreseeable future. It is quite challenging to bring in funding that has the required level of patience and timeframes in mind to be successful. The reality with these kinds of communities is that to get these models to do the good work of engaging communities, making sure local ownership is authentic and supporting community-owned solutions, takes time. There is often a tension point with our funders that says, “We believe in local ownership, but we want this done in two years”. Those things are in direct tension with each other. That is particularly true when it comes to access to energy because we are talking about the deployment of technical systems. We are talking about making sure that the technical capacity is there. Even just the basics of importing the right technology can take some time so a level of patience is needed that quite frequently is not there.

A related one. To what extent are cheap solar systems available in the communities—Chinese or whatever manufacture—now that people are purchasing making community-run things less relevant?

There is no doubt there has been an exponential growth in the amount of technology available in all kinds of markets. To be clear, everywhere is a little different. It does depend on import tariffs and regulations and things like that. Even in places like Ethiopia, where it has been challenging to bring technology into the country, you do see a growing proportion of technologies on the table available in the market. Places like Kenya, Uganda and even DRC there is a lot more because the ability to bring into the country is higher. There are technologies available. There is an energy ladder question here. There is the very basic ability—small scale lanterns, very basic solar home systems that will charge a phone, maybe play a radio and offer light—that are very widely available. The quality mix is substantial. There is often a tendency to say “cheap stuff from China” whereas there is both cheap and excellent stuff that comes from China, and everything in between. Those things are available but do not solve the community energy challenge necessarily because you cannot get up to the productive use of energy at that scale. They are slightly different challenges. It is important for people to have the basic lighting and phone charging capacity and that is important stuff. However, the challenge we are all trying to grapple with is how do you get to larger scale energy systems at the community level that allow productive use, that support food processing, pumping of water, lighting and providing power to healthcare systems and things like that. That does require a level of organisation and governance and a longer-term time horizon.

I will add to that. I fully agree with David’s points on this. There are two different problems to solve. First, access. That is what the SDG 7 goal has focused on: how do you have people getting off kerosene, being able to charge their cell phones, really basic that can be supplied by a device in a home? If you are getting into either processing or water pumping, anything like that is a much higher supplier. I also believe there is an intermediary need for a device in the home that improves quality of life and reduces the workload on certain members of the household. If you can get a system that can power an electric kettle, an electric pressure cooker, that would make a significant dent in the reduction of use of biomass and time savings for women who are largely involved in food production. I do not think the leap is even just from first access to productive use. There is a need for higher electricity usage in the home, even before you get to productive use. That would not be supplied by a small-scale solar power system.

Kate, my understanding is you worked for USAID. You left that to set up your current business?

Yes.

That is risky and scary. Why did you do that? What was not being done and why did you think it needed to happen?

As I said, I go back and forth between public and private sector. I started my career in the World Bank. I had done some private work before that, but I started at the World Bank with the Lighting Africa programme, which was seeking to bring in private sector. This was when you were seeing a lot of traction with the companies that were providing early-stage lighting systems. I saw a lot of activity on the private sector side, so I moved to the private sector side because I felt like that was going to be able to meet the need. I found there was still largely a need for public support for risk mitigation, for concessional financing. I came back to USAID because the goal of the Power Africa programme, which is where I worked, was to bring in that private sector investment. We always talked about the leverage that was needed from public resources to bring in that private investment. I still saw that there was a lack of scalability on the off-grid side. There was a lot of climate finance that was coming into Africa because the emissions profile from those African countries is quite low when most financing focuses on mitigation. There were a lot of banks that were making commitments around climate finance. We felt they were not coming in because of this perceived risk and that if we could make the risk clearer—not say there was no risk—that would bring in that private capital. In the intervening years there was then a global pandemic and there have been a lot of currency and foreign exchange challenges as well as shifting insurance rates that have made it difficult for those private sector investors to come in, in that way. In order to bring in the private sector, as I opened with, we need greater concessional capital to cover that risk because it is still quite risky and we are going into markets that are more difficult.

Who is backing you, on the country side rather than the private side?

The country side; we run an investment vehicle, the Facility for Adaptation, Inclusion and Resilience. We provide receivables-backed debt financing, to companies in the space—Sun King, M-KOPA as well as a number of smaller companies—that are providing energy access. Most of the capital that is in that vehicle is from DFIs at this point or from family foundations.

This is a question to David and Kate. Could you explain why energy access is so important to climate adaptation, please?

Absolutely. This a linkage we need to make far more directly. If you are looking at a community that does not have access to energy they are increasingly vulnerable. It is a vulnerability multiplier in terms of its ability to manage its resources, have access to information. I look primarily at off-grid energy. Off-grid energy in certain areas is more resilient than grid energy. You are not worried about flood conditions knocking out powerlines. You are not looking at the heat impacts you have on powerlines as well. It can be something that is more clearly resilient in areas that are pretty remote and very difficult to serve, where a line might not get fixed for months to even years in some cases. We are still seeing a lot of climate migration. It is a very flexible energy solution for people who are having to move their location or who might still be a past-source community. That resilience on the energy access side is access to information, is access to communication tools so that they are able to charge cell phones and listen to radios. So I do think of it as to do with climate adaptation, but it also reduces that kind of multiplier effect of the poverty that lack of energy access brings.

Thanks very much. David?

I am so pleased you asked this question because it is something that only in the last 18 months or so has started to gain a bit more traction, and it is something we had been trying to demonstrate a case for, for a while. I think Kate did a great job of presenting the arguments here and I just want to add a point of emphasis. We think about it in three ways. There are the enabling capacities: lots of adaption means communities need to be able to do something different to be able to react to changing environments—being able to receive information, being able to communicate with one another, while also being able to change livelihood systems, or just require energy. There is no way to do that without reliable, modern energy services. The second one is the migration. People will be more mobile; flexible energy services are so important as we see an increase in people moving around, which will continue and there is no doubt about that. Finally, the resilience of the systems themselves. I was part of Mercy Corps’ response to Hurricane Maria in Puerto Rico a number of years ago, and saw the brittleness of that grid and the way that communities suffered not just from lack of access to electricity, but the water pumping system completely seizing up because it was all reliant on the grid and there was almost no back-up anywhere. We had been working there to try to develop community scale systems that are more resilient to the inevitable hurricanes that will hit the island in the coming years. So all this is important. I have always felt it is a good entry point for community led adaptation because it is very tangible and it is something that communities will always mention in the top two or three things that they want money to do. There has been a tendency with climate finance over recent years to focus very heavily on the energy transition, and that money has flowed more to the more middle-income countries. Even in sub-Saharan Africa—those wealthier countries where there are fossil fuel heavy grids that need to be cleaned—that is obviously an important goal, but we sometimes miss the “just” part of that just energy transition and have left behind those communities that are not currently using a lot of energy. Therefore, you cannot count any greenhouse gas emission reductions and report those, and it has made it less attractive for some climate finance.

Thank you. Noah, over to you.

I will speak to two points. One is I do believe that the service delivery and financial infrastructure does need to be private sector. If you are a company financing solar home systems, you have sales agents. You have a lot of those pieces in the market that make a better service experience and after sales experience for those customers and also incentivise to keep them as customers and continue trying to provide them greater levels of service, refinance for a larger system, and so on. There is a lot of evidence to show that the private sector delivery model is superior to some of the programmes that were running before. If you are bringing in public sector financing only, priorities can change, there can be a politicisation of how that money flows. If you have the pipes and the infrastructure on the private sector the incentives are there for them to continue to operate in those regions and to continue to try to serve their customers as well. That is where there is a need for that. However, as I think David noted, there is not enough public resources. This is a very outdated number but from Power Africa we always said that bringing in universal access to Africa was $835 billion. That is from a McKinsey report that is probably 10 years out of date, if not longer, at this point, so the need has grown. That money—[Interruption.]—partners from the development banks, from the Governments themselves. You do have to figure out a way to bring in private sector. I think that the capital does have to—[Interruption.]

Sorry.

Sure.

Kate, would you also mind turning your video off because that might help.

Sure.

Thank you.

Both David and Kate have kind of said about this need to unlock private capital, and of course quite a large proportion of UK aid now is directed towards trying to unlock private capital, particularly through British international investment. Overall, it has not been as successful as was hoped 10 years ago—that moving to trillions of dollars, trillions of private sector investment coming in to the development area. There were a number of concerns that I can share about that; I will mention them very briefly and then if there are any follow up questions we can talk about it in a bit more detail. Something that has already been mentioned is that when aid is channelled through private sector instruments it is skewed towards lower and middle-income countries—India, South Africa, Morocco, Nigeria—and away from the most vulnerable countries, those least economically developed countries, because of course those areas offer that better return on investment. Because we are in this very scarce ODA period at the moment I am not sure that is the best use of that scarce resource. There has also been some concerns about a lack of transparency and monitoring when it comes to aid channelled through private sector instruments. There is a concern that it will increase tied aid because it is going to countries outside the scope of the OECD DAC tied aid recommendations. There have also been some reports—particularly from ICAI—that this type of investment does not have poverty reduction and the poorest at its core. There is a localisation issue here as well because if we think particularly for British international investment they do not have to give that investment to companies that are registered where the investment will go. So there are a few concerns that are good to consider when we are thinking about how to bring the private sector in.

Yes. It is helpful to think about it in two ways: there is who pays and who is delivering, and those different roles of the private sector there. My colleagues have made the point well, but we are focusing on communities whose ability to pay is pretty low, and in many cases it is extremely low. Therefore, any solutions have to ensure that we are not relying on a model that we are sort of pretending will be purely commercially viable at some point down the line, because it will not be. Having said that, almost everybody in this cohort is paying something for energy currently so the real question is what is the subsidy that allows the different customer groups to participate and how do we design that well and ensure that public and philanthropic money is able to play an important role in targeting their resources at those who need it most. The delivery mechanisms: we have worked for a number of years now with a whole range of private energy service companies across sub-Saharan Africa. It is a rich ecosystem now; there has been an energy revolution in sub-Saharan Africa. There are a lot of companies that are better at building, deploying and managing systems than NGOs and the Government are, so there is absolutely a role for them, up to and including in refugee camps where we have been working quite closely with private companies to do that. That does not mean that is not an important role for public money to be paying the bills, at least the capex up front that is required to ensure these models are somewhat viable.

Before I was specifically talking about ODA that is used to draw in the private sector, so through British international investment. This is less of an issue where it is the kind of the traditional ODA projects and programmes that are overseen by the FCDO. The issue is that there has been such a reduction in the amount of funding that goes to those most vulnerable groups, and you will all be well versed in why that is.

Certainly, yes.

There has been a tendency to date to think there is sort of a blended finance model that will work everywhere if we calibrate it correctly, and the reality is it is very different in different contexts. However, there is no question that energy is a market customer are able to pay something for a product and that amount can grow over time. It is important that, in any given context with targeted populations, we are able to work locally to understand what the right blend of capital for this particular market is, which will maximise the ability of private sector capital in different forms to play a role, and that we target the ODA where it is absolutely needed. There is an ability to blend everywhere and, as I say, we are working in some of the most marginalised parts of the world and we are able to find models where you can blend capital, but it looks very different everywhere. Unfortunately, often the answer to these things is we have to be very context specific and do the work in each location, which is the intention with policy desires to move quickly and have a broad brush as we try to understand. I am sure Kate has views on this.

That is a lot of our reason for being as well is that we have data across the continent and we can clearly understand the commercial markets as well as the less commercial markets. We have looked closely at how we could best serve—[Interruption.]—and we are financing the companies that do, but we can be a partner in identifying what is the ability to pay for some of those households. We have done work in the past with Sustainable Energy for All or World Bank for looking at what sites would need what levels of subsidy for a solution to be viable. This ties into the blended finance point as well. I think David makes a good point that it is not the same model everywhere. Having been on the side of providing the public and the concessional portion of that, and in a constrained environment, we always wanted to cut it as close as possible: what is the minimum number of public resources we can use to bring in the private sector? Unfortunately, that means you end up with some projects where the private sector loses money or the deal is too tight to work. It is a challenge to figure out what is that right mix, but if you try to cut it too close and focus on getting the absolute highest leverage you possibly can, you might end up —[Interruption.]—of that financing model.

There is a lot of things to it. I think a lot of what is already happening needs to continue, because a lot of people are getting past first access, they are moving into things that improve quality of life and output from the household, as well as productive use that improves economic output. They are transitioning to a place where you will have hopefully a system that powers the commercial and economic viability of the country as a whole. But we still have that 10% who have not been reached. Rough ballpark numbers say half will be reached by an off-grid solution and I think figuring out how we incentivise investors and the distributors to serve those communities, as well as work with the communities because they are the hardest to reach, they may have to be managing a lot of it themselves, they may have to be running a microgrid or even distribution of solar home systems. I think that engagement is becoming even more important as you are going into the most remote populations who are also the most vulnerable. There is nothing I would say, “We need to stop doing that.” I think it is keep doing what has been happening to date, as well as focus in on that last 10%. I have worked my entire career in energy access, and I have seen a significant improvement in how people are being served. I fully believe we will have universal access, and I will put myself out of a job at some point; 2030 may be a little bit close but we are on track to be able to achieve this, and we can get there.

I think generally it is focusing on the development and less on the returns. That is not directly to anyone that we are working with, but I do think that in a time of limited resources there is a need to show the development banks are getting good returns or even getting some returns, they are not losing capital. I think that does start to take away from the development impact when we are now focusing on the hardest to reach places and that last access. If anything, it should be shifting more towards a development model rather than trying to focus more on a commercial model in order to reach that first access. The commercial piece can still focus on larger scale systems, industrial energy supply, commercial energy supply, but the access problem is getting less commercial, so it is figuring out how we provide that financing that can reach those households.

I think it is a massive opportunity. Credit to the World Bank and African Development Bank for putting the weight behind this to try to engage on both the off-grid and the grid side. As I said, half will likely be served by an off-grid solution but there is a need for greater grid development as well. That will be done by a community programme as well. The World Bank and the African Development Bank have fantastic convening power and hopefully can bring together the partnerships that are needed and the commitment from the Governments themselves to focus on reaching everyone within their countries.

The Mission 300 I have been pleasantly surprised, might be unfair, but pleased to see that it has maintained an off-grid focus and I hope that continues because this could have quite easily gone to a full grid focus. So that has been promising, and we think there is lots of potential there. There is also potential when we think about climate finance flows that are flowing directly to national Governments. We see a lot of countries completing their climate action plans. Some have done a good job of integrating some of this off-grid energy, as both an adaptation as well as a greening of their future planning. There is more opportunity to do that and that is a source of funding that is undervalued at the moment.

Kate, can I stay with you for a minute and ask you to reflect on your time with Power Africa? What would your main takeaways be if you were to be informing the UK’s approach on energy access?

As I stated, the UK has been an integral part of getting to where we are. There is nothing where I would say, “Well, this programme is not working; this should be discontinued.” Figuring out how to balance the reduced resources potentially and how you maintain a lot of what has been happening is important because I do think that it has been an extremely important voice in the space, both in terms of dollars invested but also on the policy and Government support side. For the focus on community energy, I would say that the UK support, in my opinion, has been largely top down. There is a lot of investing in companies that are investing in programmes that bring energy to new areas. I do think we need to figure out how to support on that bottom-up side and make sure there is that community engagement, drilling down into what areas have not been served, why have they not been served, what model could work there, because I do think there is a lot of differentiation in terms of what is the best fit. Some of that is from a technical side, as far as whether it is a home system, a mini grid, or running a grid extension line. I also even think: is it a community who could manage a system themselves, is it some place where an energy as a service model works best or is it somewhere that financing a system directly and a household owns it works best? There is a lot of differentiation in terms of cultural norms and how people feel about their energy supply and their own situation. So, as I said, if resources were abundant I would say continue everything you are doing and drill down on to that community, reaching that last 10%. Personally I would love to reframe the energy access discussion on focusing on how close we are because we tend to focus on the daunting hundreds of millions of people who are left—and it is unconscionable that in 2025 we are still at that point—however, we do have a pretty good handle on what is remaining and focusing in on how we reach that goal as quickly as possible.

Thanks. Again, in your time with Power Africa, how important was the community engagement within that programme?

Extremely important. We were working on both the grid projects as well as off-grid communities and definitely saw projects fall apart where developers did not—[Interruption.]. Obviously, most of those projects have community engagement standards and protocols applied to them. I also do think it is a trade off, and this point came up earlier. Community engagement can be very slow and so looking at microgrid companies or microgrid developments, where I saw some that did —[Interruption.]—but they have still only scaled to tens of systems, and I think if you look at that—

Kate, could you say that last part again? You saw some communities where?

Where the community engagement from microgrids was excellent, microgrid developers. They were there all the time. They were focused on the community engagement and energy needs and how to serve them, but the scalability was not there because it was such a high-touch programme. Their success rate is probably excellent. Looking instead at how you make that a scalable model, how do you have 100 of those companies—realising that it may not be commercially viable to do that because it is such a high-touch model—but how do you actually increase the number of those companies? Because it is very slow to scale if it is done in a commercial way or trying to be so with that level of engagement.

Thanks. This is to everyone, and I will come to Melita first. UK support for energy initiatives has a strong focus on research and innovation. Is that the best use of development aid in terms of how we use that money?

The focus on the research and innovation?

Yes.

I think that definitely has value. Going back to the point that some of us made earlier, drawing on the expertise and the skills already there in aid recipient communities at that research and innovation stage would also be a good use of that funding.

Thank you. David, do you feel the same?

Yes. I do think there is a role for that, a proportion of money to be invested into innovation and research. There are still knowledge gaps, particularly in very specific contexts, on what works and how does it work and what technology is right. We want to lean into that as part of the challenge. I think UK aid has done a good job; the Transforming Energy Access programme has done a good job of supporting innovation, not just in the UK but we have been part of some programmes that have managed to channel money to local entrepreneurs and innovators across sub-Saharan Africa, and I think that is very positive. However, I do think there needs to be a balance between that and having money available to deploy and support community-based systems. There is an opportunity here; there is the sort of energy specific funding, which I think—as somebody referenced earlier—is quite small. Then I do think the UK aid has an opportunity to more intentionally integrate energy activities into some of the broader programming. I still see a lot of integrated rural development or resilience building programmes in parts of sub-Saharan Africa that work with livelihoods, they work with farmer groups, and they are looking at ways to increase sufficiency of agriculture systems in different ways that do not bring the energy piece in. That is a very low-cost opportunity to do that since a lot of the ground work is already being done. We are working on one programme in Syria, building local resilience in Syria with FCDO funding where we have brought energy in later on with support of the FCDO team. I think that is a good example and there are lots of opportunities to do that, to kind of magnify the energy impact and take advantage of all that investment and innovation.

Thank you, and the same question to you, Kate?

Sorry, in terms of what else we would want to see the UK Government doing?

Focusing on research and innovation; do you think it is an effective and equitable use of development aid?

I will say “yes, and”. I think that it is extremely useful in terms of being able to see models that work. I will say I do get some frustration in trying to look for problems that are not there or try to reinvent things that do not need reinventing. We do not want to use a one-size-fits model everywhere; however, we have tried a lot of different things. On the technical side electricity systems are quite basic; there has not been a lot of change to the basic infrastructure in quite some time. There has been a lot of innovation on the solar home systems and microgrids. Some of the technology can be used for remote management, as we discussed. But I would say focusing on implementation is the most important. Considering the local context but not kind of going back to the drawing board and saying, “What else do we need to do from a basic research level?” We have the tools to achieve universal access without having to do that. It would need to be targeted on what has not been solved for or what is the next level that needs to be looked at in terms of research. But my focus is on implementation rather than trying to look for problems where there may not be any.

It is a little early for me to know how Mission 300 will play out, but I understand the intention. It is worth being clear about what I mean when we talk about research, innovation and technical assistance. It is much more on the delivery model side of things. Kate’s point is important: that we do not need to go back to the drawing board and reinvent new technology very much. There are some areas around some electric cooking innovations that are useful and some cold chain things where we see improvements. Generally speaking, the delivery models in different contexts is where I would like to see that technical assistance and local research to understand what is working and how could we scale up things. There is so much happening out there, and it is all quite fragmented. It is about the extent to which we can focus on where we are seeing success, where are we seeing the efficiency of public money. I want to move away from this idea of commercial viability and more towards how we make public money as efficiently deployed as possible. There is still a good amount to be learned in different contexts so that we can scale more quickly.

If I could come in on this as well because I would differentiate between research and technical assistance. Technical assistance is absolutely essential and one good example we have seen that is UK funded is the investment in our investment vehicle from Financial Sector Deepening Africa Investments team. It came in with funding that is in the investment vehicle, which is extraordinarily helpful. It also provided a technical assistance grant for us to be able to work with smaller local companies who might have a business model that is working pretty well but their financial documents were not at a point where it is easier for us to assess. They needed some help with their operations overall to make it a more bankable project for us. Being able to have that dual support of the investment into the vehicle itself, but then the technical assistance alongside it was extraordinarily helpful.

A final question from me to follow up on that: how could UK aid better support community energy initiatives internationally without imposing UK centric models that may not fit local realities? I come to Melita first.

Two things; I think both have been mentioned. One is about bringing in long-term flexible kind of patient investment—these projects are long-term projects—which is key. Also, taking that localisation seriously and embedding local stakeholders in the design and delivery of programmes. That is the only way to ensure that projects are sustainable and have a sustainable impact.

A couple of things. If we look at what success would look like, particularly for sub-Saharan Africa, there needs to be hundreds, if not thousands of energy service companies and social enterprises and different kinds of community groups that are owning, managing and running energy systems in a distributed manner. Ways to support that ecosystem—to Kate’s point before—are through technical assistance, start-up capital, small grant capital, and enabling that ecosystem is important. The UK Government have been doing a good job of that at a certain scale and there is more opportunity to do that. The second piece: I would re-emphasise the point I made before about integrating energy into other things. There are lots of low hanging fruit in other development initiatives where we could see advancements in energy, providing they are the right timeframe. That ability to work for more than two to three years is fundamental.

Thank you. Kate, did you have anything to add?

I would add—and I think you answered it in your question—that the way to do it is to not take a UK model or UK centric model. However, that sort of top-down infrastructure, which we have seen in the UK, in Europe or in the United States and elsewhere, is based on a population density that is quite large, and it is based on demand that is quite high. Focusing in on the fact that most of these populations are in very low population density areas, and some of them are still transitory, it may be very difficult to access them. It is a very different problem, so we take it as a different problem and focus on what the situation is on the ground and how to best serve them.

David, while you were talking about integrating energy, I am thinking when there is a surge of displaced people and a camp is being rapidly set up, what is done in relation to power?

Currently most often very little. You will find the relevant UN entities or even NGOs will set up generators for their own power and to pump the basic things like if there is a water pumping site or things like that. There has been very little focus to date on refugee or IDP facing power services, and it has tended to be a very organic development of solutions from the family that shows up with a car battery and rents it to their neighbours, or someone who has managed to bring in generators. That is starting to change. There are some pretty robust conversations happening and certainly Mercy Corps with some of our peers have been working to demonstrate that you can actually set up these models. There is a way to think about it with new camps; it is sometimes hard to think about long-term infrastructure when you do not know how long that particular crisis will go on for and how long that community will be there. I understand the hesitance. There is a permanence issue as well where Governments do not love to see what they consider permanent infrastructure being set up. However, we do now have very mobile and deployable systems. We have demonstrated that refugees and IDPs are already going to pay for power anyway so we should probably provide options that are higher quality and affordable. There is a lot of opportunity here to eat into that very high proportion of displaced people who do not have power. I am hopeful that we are starting to see that shift a little bit. The final thing I will say on this is there does need to be a change in attitude among some in the humanitarian system that simply do not see a role for private companies to ever come into those camps. The reality is that energy service businesses are the ones that know how to do this, and I do think there is an important role to play with all the appropriate risk management and protection issues in place.

Absolutely. If you have any examples of “good” that you are able to share with us that would be appreciated because unfortunately, as we see, when these camps do set up they are rarely temporary, so taking your point of building things in from the beginning. Also, I notice time and time again the humanitarian aid tends to move into development, but they tend to be different agencies that are delivering, or different parts of agencies. That join up that you are talking about rarely seems to happen. Very interesting on the private sector involvement. Thank you all very much. Incredibly interesting and thank you for giving us information in the most laser sharp way. Very helpful for us. Kate, good to see you and sorry about your line.

Apologies for that.

We lost words, but we got the intent. If there is anything that we have not been able to capture we will get back in touch with you. Thank you very much. Please do stay if you want to watch the next session. Witnesses: Juliette Keeler, Professor Ed Brown and Emilie Carmichael.

We have a lot of questions and not a lot of time so if you could try to focus on the information you need to share with us first. Emilie, could I ask you to introduce yourself and your organisation please?

Good afternoon, I am Emilie Carmichael from the Energy Saving Trust. Thank you very much for having me here today. It is an honour. It is my first time in front of a Parliamentary Committee, so it is exciting, but I am a little bit nervous. I have 25 years’ experience working in sustainable energy with the majority of those international—primarily at the European level—and the last eight years working in the off-grid energy sector where we comanage the Efficiency for Access Coalition, which is a global coalition working to accelerate clean energy access through affordable, high-performing appliances, chaired by FCDO and Ikea Foundation. We also co-manage the Low Energy Inclusive Appliances programme, which I will call LEIA from now on because it is a bit of a mouthful. If you are not familiar with us, Energy Saving Trust is a mission driven organisation dedicated to promoting energy efficiency, low carbon transport and sustainable energy use to address the climate emergency. Lastly, since 2017 we have been working in partnership with an international NGO called clasp to deliver the LEIA programme, which is funded by FCDO through the Transforming Energy Access Platform and Ikea Foundation. It is a research and innovation programme that is working to improve the availability, efficiency, performance and affordability of solar powered technologies and appliances particularly suited to off-grid contexts, so communities in rural and sub-Saharan Africa and Asia.

Thank you. Juliette, I know you are reasonably new in your role but that means that you have that clarity of sight, so tell us who you are and what you do.

Hello, everyone. My name is Juliette Keeley. I am the Chief Impact Officer for the Shell Foundation and new to this role. Thank you very much for the opportunity to speak with you today. The Shell Foundation is an independent UK registered charity focused on empowering low-income customers in Africa and Asia through clean energy solutions that meaningfully impact their livelihoods. We are organised around three customer groups—we think of them as customers, not beneficiaries—smallholder farmers, transporters and microentrepreneurs. We focus on a three-part approach. We support innovative businesses that are providing clean energy solutions that meaningfully raise incomes, so fostering innovation. We support these innovations to scale through partnerships, which I think is very pertinent to the conversation you have been having, and we help mobilise private capital into these areas. We have been working with the FCDO for a long time, since 2011, through two main partnerships: Transforming Inclusive Energy Access, and CASEY, which focuses on scaling agricultural interventions.

Hello, my name is Ed Brown. I am a Professor of Global Energy Challenges at Loughborough University where I have been for over 30 years. I think you met one of my colleagues from the Climate Compatible Growth Programme; that is one of the programmes that we run out of the STEER Centre. We have been working closely with local government over recent years—which I have not heard a lot of discussion of thus far—looking at county energy strategies and so on under something called the Energy Delivery Model. Then finally—which is the main reason I am here—I am the Director of the Modern Energy Cooking Services Programme, which is another UK aid funded programme funded under Ayrton, the same as LEIA and the work that you guys do as well. Thank you.

Thanks very much. What aspects of working with the FCDO has been most valuable to each of your organisations? Let’s start with you, Emilie.

What has been most valuable? Well, I guess the opportunity to advocate for the role of appliances in achieving development goals. When we first came into the sector in 2017 the role of appliances was not very well acknowledged. Why do they matter? Because having access to electricity is not enough. It is what you can do with that, and off-grid appliances and technologies have an important role to play in enabling the achievement of wider development goals. Rewind to 2017 when the LEIA programme was established and the Efficiency for Access Coalition was launched, there was only a very small group of donors who believed in the role that appliances could play and there were very few technologies—high performing, durable, appropriate technologies—available. Through the funding that we have had from FCDO for the R&D fund that we have operate, that has been catalytic and unique in terms of supporting early-stage innovators to bring these technologies to market. The research we have undertaken under the programme has plugged important knowledge and data gaps and has generated the insights to convince the sector to put themselves behind productive uses, like is happening now under Mission 300. I always use the example of when LEIA and Efficiency for Access was launched at the Global Off Grid Solar Forum in Hong Kong in 2018; appliances and productive uses were not even on the programme or on the agenda. They were not being talked about. It was in a tiny little side room. Then fast forward to last year’s forum in Nairobi and it was front and centre. The role that FCDO has played in convincing and bringing the technologies to the table has been commendable.

Thanks very much. Juliette?

Through our partnership with the FCDO we operate under a joint investment committee, and we largely build that pipeline, but it is thanks to the FCDO’s advice and connections that we are able to identify opportunities and work within these local markets. We operate very closely with local teams, and together we are able to fund R&D and innovation for agtech companies that have unproven business models and that others are finding too risky. The FCDO has also helped us scale initiatives. One great example has been the SunCulture solar water pump initiative, which has included BII and using carbon credits, all the way to connecting us with other key partners in the sector. It has been an extremely agile and flexible partnership and a great example of value for money. FCDO benefits one to one from our investment, as well as capital leveraged into the sector through both our companies that are fundraising on their own, as well as DFI coming into the picture.

I want to make four very quick responses. The first one—and this actually goes against what we heard in the last session—is that the FCDO has been inherently taking risks in what it has funded, and you gave one example of that in terms of appliances. We would give another in terms of electric cooking. When we first started looking at the Global Clean Cooking Challenge—which remains fundamentally far more of a challenge even than the Electrification Challenge—no one was looking at electric cooking. Now, with the support of the FCDO over the last six years, it is something that is gaining traction and is seen as very important in terms of demand enhancement, for example. Secondly, the FCDO has been willing to invest over the long term in programmes. We have already heard that it is important that programmes are able to embed. We particularly want to work with local communities. The way that the programming has been done, for example, through T1, T2, the recent extension of the MECS programme and so on; all of that allows us to develop the relationships that are at the heart of all of this. What is at the heart of everything we have talked about here is relationships. The third thing is I think that the FCDO’s unique ability to link an overarching research and innovation programme with the knowledge and expertise within local country offices has been impressive. A number of our programmes have recently been enacting something called demonstrators. Most recently in our case that has involved collaboration with the Ministries of Energy in Tanzania and Uganda, which are actually funded through the local FCDO offices and have evolved through careful planning between the Ministry, FCDO locally and ourselves. That has been incredibly successful. Finally, I would say that the ability that the FCDO has had to listen to those that it works with. The length of programming is one element of that. However, I do not think there are any other examples across Europe or even in the States where there has been such a strong partnership as there is now with the research and innovation community in the UK. What that has enabled us to do is make our research and innovation community in the UK much more hands on and direct in the work that we do with a whole host of other stakeholders globally. That has been beneficial for us.

It is very nice to hear glowing reviews. We do not normally get that. James.

Building on some of what you have been talking about—and if I go left to right, Ed, so I will come to you first—how do you specifically support local capacity building in a context-sensitive way?

There is a variety of different ways that we do that. As a university we have partnerships with universities in other parts of the world and our programmes engage with those other universities—for example, supporting them in developing curricula, those kinds of things, which makes sure that these kinds of capacities that we are talking about are embedded there. Secondly, I mentioned the Tanzanian and the Ugandan demonstrators. One of the aspects of those programmes is working with the national certification agencies to ensure that the appliances—in our case the electric cooking appliances and other cooking appliances—meet certain standards. It has been bringing together expertise from the international level from our colleagues in class but among others, with the national organisations responsible for the development of standards. Another component of both of those programmes is developing a repair and maintenance programme alongside the work we have done with the supply chain and with the utility in terms of raising the profile of how we can support the presence of electric cooking within the country. For example, if we support a significant increase in the availability and affordability of electric cooking appliances, if some of them break down in six months and there is no one trained and ready there to do the repair and maintenance, suddenly everything that we have been putting money into supporting will get a bad reputation. That also means that we need to make sure not only do we have the repair and maintenance, but we also have the nationally appropriate promotional campaigns and educational campaigns where we work with those organisations about the cultural applicability and relevance of the products that we are supporting.

Juliette, the same question around the context of specific support.

We come at it from a slightly different angle. Our focus is on customers. We do a lot of work with companies to ensure they are solving the actual problem and barriers that customers are facing and work to design deals to ensure that those customer pain points are included and being addressed. We also—

Is that due to having seen situations before where solutions have been designed but they do not work in that local context?

Yes, I am sure we will come to this but there is one example of failure. We work in the innovation space. We have companies that we have invested in that have gone into administration. We had a company that was doing solar fridges that recently went into administration. These are costly assets. They are hard to finance, and you need to finance them over several years. So that did not work. However, we have another company, which is at the innovation stage right now, that is proposing solar milk chillers that fit on the back of motorcycles. That fits directly into the existing supply chain that dairy farms all across Kenya already use. It also fits into co-operatives that they already work with and that they already pay to come and pick up their milk.

Juliette, why did the fridge not work? You gave that as an example that did not work.

Yes. This fridge company went through multiple rounds of funding. It expanded to several countries and could not continue to raise the capital it needed for such an expensive asset. However, we have seen solar fridge companies work in other contexts, so sometimes it is a combination of the right funding, and then the company’s structure. That is the game that we are playing in, this innovation space.

It was not commercially viable rather than there was not a need there?

Exactly. It was not commercially viable. Conversely, we have other products that are very cheap. The solar milk chillers that fit on the back of motorcycles cost $50. People are able to pay for them, and co-operatives are able to subsidise them, because they are gaining from the milk that is not spoiled and the profits they get from the additional milk that comes into their co-operative. That is an example of the things that we are looking at to ensure local capacity building, but local embedding in existing value chain, existing supply chains. We also do this with asset financing. In Kenya people are on mobile money. They are used to pay-as-you-go models, so that works for them rather than having to put up collateral, particularly for women who do not have that and would be completely excluded from owning particular productive use assets. I hope I have answered your question.

Yes, that is fascinating. Emilie, is there anything that you specifically want to add on that point around capacity building in a context specific way?

I want to add that, from the perspective of the R&D grant fund that we run, one of the things that we have driven to improve over the course of the programme is the number of locally owned companies that we are supporting directly through the funding. In the first round we were only able to support 38% of the grants that we awarded, but in the latest round we had 64% of the funding awarded to local companies. That has been thanks to the changes that we have made and the support that we have provided to those companies.

What changes?

For example, we recognised that locally owned companies would struggle to raise the amount of match funding that we required of others, so we reduced that. We also provided handholding support in developing their proposals with additional reviews and feedback on their proposals to help them improve those. This is something that has been taken up at the TEA level now as well, so some of the approaches that we used and some of the research we have done on inclusivity has fed into some of the support services that TEA has launched around gender and social inclusion, but also around local partnerships and inclusion as well.

Of the increased number of local businesses how many are successful?

It is hard to say because they are all at a very early stage. However, I could give you an example of a local company that we supported called Wala, which is a social enterprise working in Malawi focused on solar powered technologies for irrigation. There is a good example here of capacity building as well. It wanted to pilot a business model of pay-as-you-go. It bought 150 solar water pumps and used those to engage community groups. Alongside the technology, it wrapped around a whole load of training on the use and maintenance skills and business management skills, and also made connections through to off takers to help improve the route to market for those smallholder farmers, and over 50% of them were women. So, you can embed that kind of capacity building into the projects as well.

By changing your entry requirements did that make the investment riskier?

No, I don’t think so.

Thank you.

Given the UK’s domestic experience from an EST perspective with community energy, do you think there is untapped potential for sharing that expertise internationally?

Yes, I think so. It is something that we do a lot at the European level. In fact, through the work that we have been doing under the LEIA programme, we have been bringing in our knowledge and expertise of sustainable energy from the European and UK level as we have gone along. It does need to be done in partnership with other stakeholders. I could see how the Energy Saving Trust could work with local social enterprises and NGOs on the ground to capacity build them to deliver similar packages of support to organisations in other countries. An example of where we have used our knowledge in the technology development side was that when we first launched LEIA the focus was on efficiency. By making technologies and products super-efficient you can reduce the overall cost—because PV is still expensive even if the price is coming down—so the overall system becomes cheaper. However, a lot of the movement and development in the European space was around the circular economy. We undertook a lot of research to help move the sector towards more circular economy principles, which are also very compatible with affordability and localisation strategies as well. There is lots of opportunity to learn in that direction but also back to the UK as well, because I think some of the innovation that we see happening—especially in the digital space and the combination of services, people on the ground and digital predictive systems—is exciting and is something that we can learn about.

That is exactly where I was going, which is: are you seeing things that can be translated back into the UK’s domestic market, from the innovations that you are seeing internationally, for our community energy?

Absolutely. In fact, in Europe the French are advanced in implementing repairability strategies. That is something that we have brought through the LEIA programme to look at developing repairability indexes and being able to stimulate the private sector to be more minded towards repair, making spare parts available, allowing third parties to repair products. To be honest, that is something that the UK has fallen behind in, so there is a lot of learning that can come from what is currently being done in this sector, back to the UK.

The other example of that is what we can learn from very culturally specific research. For example, one of the things we have focused much of our attention on is: why do people cook in the way that they do? What types of cooking fuels do they utilise and why? If we are looking to find mechanisms to help them move away from cooking with fuels that are going to kill them and damage their resources, and so on, what can we learn about that process, about how people cook, and how they learn to cook from their families? At the moment, there is also an emphasis in Europe and the States on the transition from gas to electricity for cooking, and perhaps sometimes we have underplayed the importance of that cultural dimension. So that is one area. I have one colleague in my team who used to work on the European transition, and she is now working on this area. That is an interesting way where there are lessons to be learned, and not necessarily the ones you would have thought, in the sense that it has a very strong cultural component to it.

Juliette, how does the Shell Foundation define clean energy? What is included under this term?

That is a great question. We define clean energy as energy that either displaces assets or products that emit CO2 emissions, or CO2 emissions equivalent, but also assets that produce no energy. For example, cooling vests. We have recently invested in a technology company that has created vests that cool farmers as they work. They also create cooling tents that microentrepreneurs, and street vendors can put over their produce to cool their produce and extend the shelf life. We are taking a broad definition approach to it.

Ed, how is clean energy defined in the context of your programme?

That is a complex question. It sounds like it should not be a complex question, but it is because, in the case of cooking specifically, you have the issues to do with the production of particulates from the cooking process, which have massive impacts upon health. Something like 3 million additional deaths every year are caused by the continued use of polluting cooking fuels. There are more deaths, for example, than from malaria every year, which is why it is such an important topic. At the same time, cooking using biomass, charcoal, or dung, has a significant implication for CO2. The production of CO2 from household level cooking is around the same level as the aviation industry, in terms of its impacts. I am going straight to the House of Lords from here for the session on super pollutants. When you look there, the sourcing from household level pollution of black carbon and methane is even higher. It is a dramatically important component that is made up from all of those individual decisions of how each family is going to cook their meals. As a solution for that, what we are all working towards is, ultimately, electric cooking because electric cooking, on clean grids, is by far the cleanest version of cooking technologies. However, cooking on LPG, for example, is cleaner in terms of particulates than cooking with wood or biomass, and so on. However, there are trade-offs, in terms of this whole debate over transition fuels and so on. In our recent report for the African Union, we recognised the need for multi-fuel solutions and strategies, but were quite bullish in our argument that financially it makes far more sense to invest alongside Mission 300 and alongside all of the investment going into the electricity infrastructure, than investing in what will become stranded assets in terms of the fossil fuel industry, gas, and so on. That is our thinking on it, which is why I started by saying it is a complex question to answer.

Out of interest, do you look at biogas at all?

We do. We have recently done studies on biogas. A couple of interesting stories around that: first, biogas is very regionally specific. For example, where you have a strong livestock rearing culture, then it makes sense. Also, where there is a strong agricultural residue, which is constant over the year, so it is not something that has these peaks which then you are not able to keep the biodigesters going throughout the year. Biogas can be an important component. There is also a role for bioethanol in Kenya, for example. If you can locally produce bioethanol, it can be an important component of a mixed strategy, particularly if you get a lot of load shedding on the electricity system. It is a balance of those issues.

I seem to remember, it was two cows, zero grazed, would give you enough biogas for a family.

And if you can keep that supply constant, yes. The other issue is if you keep the biodigester maintained effectively.

Can I just jump in and add a little bit more on the clean energy piece? I want to add another dimension, which is around one might assume that an off-grid appliance is a clean appliance because it is running off a PV panel, but there are cleaner appliances than others. That is about the embodied carbon that goes into these products. For example, we have supported a cold room project where we have seen massive differences between one design and another. Those that have been able to switch to phase change materials, reduce the use of certain refrigerants, and therefore minimise the use of batteries and—through the efficiency—the use of PV panels. We have worked with them to undertake lifecycle assessment and, through that lifecycle assessment, design and install a cold room in Kenya that has gone even further to reduce the embodied carbon by a further 68% on that world class design, just by using locally sourced materials for the construction of the actual casing that it goes in. That also delivered a 20% cost saving as well, and was able to be assembled locally, using local, renewable materials that are not the insulated panels that you have to fly here or bring in a container, which also has emissions associated with it.

I have two more questions for Juliette. This is where I play bad cop, so apologies for that. Is it correct to say that FCDO donations are supporting fossil fuel projects or investments?

No, that is incorrect.

Thank you. That is good and nice to know. That is a one-word answer for that one. Secondly, considering the scale of Shell group’s carbon emissions, how does the Foundation respond to concerns that it has worked among greenwashing?

As I explained, the Shell Foundation is an independent UK registered charity, with an endowment that did come from the Shell Corporation, but we maintain independence at all levels, board down. We do have Shell members on our board, but they are a minority. We are governed by strict UK Charity Commission rules, which require us to report any incidences. We do benefit from Shell Corporation HSSE guidelines, as well as technical expertise for technical innovations. The final thing I would say is that Shell Corporation is barred from speaking about us publicly.

By whom?

By the tenets of the Charity Commission. If the Corporation speaks about us publicly we would lose our charitable status. We are also barred from making any joint investments or investments that would benefit the Shell Corporation.

Fascinating. So, I will just say no more questions, your Honour.

This question is to all of you. I will start with Ed and work our way along. How do you determine where aid has the greatest impact in a model?

That is really good question. How I want to answer is to talk about lowest hanging fruit and most difficult, because there is always a tension. Just to take the area that we have been working in. Six years ago, but it is actually longer than that since we started thinking about this, we recognised that there were still—it was higher then, but if we take the figures now of 2.1 billion. So, we are not talking about 600,000, we are talking about 2.1 billion people that have no access to modern energy cooking. It is actually 3.5 billion who still regularly use unsustainable cooking fuels. That is a massive, massive challenge. We have spent two to three decades working on that challenge and barely brushed the surface of it. When we came in, our goal was to have a big impact and to think differently, which is when I said about FCDO taking a risk. When we went to FCDO with the idea, “Why is no one talking about electric cooking?” everyone else we spoke to in the clean cooking sector said, “Don’t be stupid. It’s far too expensive”. What we have done with the support from the FCDO is provide the evidence that, in a growing number of places, cooking with electricity makes perfect economic sense. Much of what we have done has been to focus on those people that are cooking with polluting cooking fuels but have access to electricity. It is looking at those people, “Why are you still living in urban areas across Africa and Asia, and you are still cooking with charcoal?” Because we have been able to target those people easily, that is where we are seeing the numbers that we have begun to see about people transitioning to fuels that are much better for them and the environment. Not in all cases because, as we know, electricity is generated in fossil fuels too, so that is a big question within it. However, that does not mean that we do not want to also focus on those people that are most marginalised and far away from having access to that. Our programme goes from working with utilities and regulators and the grid, right the way through to working with—one thing is, we have presented all of this as quite denoted. There is the grid, which is urban and peri-urban, and there is the off grid, which is the mini grid sector and solar home systems. As a geographer, what I want to tell you is that it is not that simple. Things are changing—just take Africa, for example: Africa is urbanising rapidly, which means that there are very few parts of Africa that are not intimately connected to the economies of the cities within the regions that they are located. That means that we have companies like Gridworks in the UK investing in metro grids of 200,000, but they run a separate system. They are not part of the national grid. We also have ARC Power, another company in Rwanda that is being supported by the UK, which is moving the grid system out through their mini grid investments and then being taken over by the grid. What ARC Power does really well, is that it is good at engaging with local communities and making sure that, when you bring power, you are also bringing the ability to consume. When we talk about Mission 300, that is one of the things that is really important to make sure it is embedded within there. It is not just about connections; it is about demand. You also then have communities where people are already paying for their cooking fuels but are off grid. Working with mini grid companies there is something we have done, particularly over the last two or three years, and we are beginning to see good results there, particularly where the companies have modelling around the difference that cooking loads can make to the economic viability of the grid providers. Then you have solar home systems. In those cases, where we are seeing results for cooking, are where we are working with organisations that have four, five, six, seven years of experience working with women’s co-operatives, agricultural co-operatives, whatever it might be. There is not a simple answer to that question. Within the bounds of the budget that we have, we are trying to do as much as we possibly can but recognising that there are different ways in which we do that. Some with big numbers, and some with proving the case for the smaller numbers, but it is much more expensive.

Ed has touched on several of the same ideas we have. It has been critical for the UK to fund R&D, business models that are unproven, that no one else wants to fund. But also, to help local companies assess different approaches to understand which products are going to be in highest demand; which are the products that customers are willing to pay for; what are the price points they are willing to pay for and being flexible. Ed spoke about the grid that keeps expanding. I recently visited a farmer who had a biodigester and a solar water pump. It was an electric water pump, and I asked him why he had an electric water pump, and he said, “We’re connected to the grid here” and we were two or three hours from Nairobi. The grid continues to expand, and for certain appliances, you don’t need them to run all day long. For water pumps, you need them to run for a couple of hours for you to store your water. Having capital that can be deployed in a flexible way and also thinking of these different clean energy companies as a portfolio, and thinking, “This is becoming a greater need in the market, can we invest here?” and “This is becoming less of a need because the national grid is growing”. Also, getting companies to scale—I am sure you have heard about this. From the local small businesses that are struggling to get access to funding, all the way to companies that get to a certain stage but cannot access funding from BII, which requires $10 million to $15 million in tickets. And also providing proof points to local banks. One of the things that we have not talked about is local investments. I mentioned that we work with co-operatives. One deal that we recently closed was with Co-op Bank in Kenya, which has 9 million account holders and works with 2,000 co-operatives. It is piloting small loans across four or five different productive use assets, which is reducing the cost of borrowing to consumers from 15% to 10%—10% still sounds high, but that is the reality of what we are working in, in these markets. Those types of interventions to local financial institutions to prove that our customers are bankable, and then for philanthropic capital and donor capital to take a step back once the banks have bought into this idea that this is a customer segment that they can reach.

Thank you. Was there anything that you wanted to add to the same question?

I agree with some of what you were saying. For me, there has been an awful lot of investment—quite rightly so—and support for building the enabling environment for the scale that is going to be happening now. At the same time, there has been a huge amount of support—well, not a huge amount, in terms of financially much less—to build the demand side. So, bringing the products, the technology, innovation, and establish groups, like the Global Distributor Collective, that the FCDO has made great efforts to build. Some of the productive use appliances that are near to market now are suited to the current distribution models for scaling, while the smaller, simpler technologies that have a low level of customisation are just replacing something that you might already have, like a radio or a fan. Solar water pumps are kind of an example there because a lot of people are using diesel generators, a lot of people who are adopting these. However, when it comes to the bigger, more complex technologies, those kinds of delivery models are not going to work. What we do see in the sector is that a lot of investment has gone into these bigger companies, but in most societies SMEs make up how many? I think 90% is the figure that is always given, so we need to recognise the role of SMEs in the supply chain. Local companies, like the last mile distributors represented by the Global Distributor Collective and social enterprises and innovators, who work closely with the communities they support, and are better positioned to deliver the solutions, but have not been able to access the finance and lack the skills as well. I suppose my message is that the bigger barriers that exist are on the demand side, and around affordability. It is about testing and scaling the models that we see emerging: like energy as a service, concessional consumer finance, affordability and then adoption. For example, fridges and cold chain have seen slower adoption rates. The reason for that is probably that in rural Africa only 4% of people own a fridge. It is not like we are saying, “Here, have this solar fridge. It will work better. It will be better for you”. It is actually behaviour change that needs to happen. There are people that need to be trained to support someone to decide to choose the fridge that is right for them—or the freezer or the cold chain solution—and to operate and service and maintain it.

Can I just say we are running out of time? So, Ed, yes.

I just want to say that all of that costs money and takes time. One very quick point I will try to make is that it is not only to do with affordability for the consumer, but also about the viability of the provider. One of the things that we perhaps need to take stock of is that, in most of the meetings I have been in with grid providers, there is not one example of a mini grid provider that is entirely commercially viable. That is a really important thing. Also, there is not an African utility that is also fully viable. One of the innovations that we have come up with is that we have to take demand seriously in both places. That means not only investing in connections. It means working at this level of demand. Cooking is something for which, in a vast number of cases, people are already spending money on fuel. I know we talk about people just being able to gather wood. That is becoming less and less likely as our environment becomes increasingly degraded. What that means is, if we can offset the cost that they are currently paying, that is not new money that they have to find. It is transferring money that is being spent on polluting fuels into greener energy and that can draw in carbon finance, so there is a win-win across all of that.

Just to touch on a point, and again this is for all of you, how do you avoid creating dependency or crowding out the private initiatives, and what helps successful pilot projects grow into those solutions that make a big impact in the market?

Direct, brief answers please.

In the areas of subsidy, designing and concessional finance, it obviously needs to be done in a really careful and sustainable way. The reality is that, at the moment, of the 38 million refrigerators that are needed in an off-grid context, only 13% of those are affordable. At the same time, these areas that we are talking about—remote, rural areas—are not commercially viable to go into, but some of the smaller companies can find models that mean they can reach those communities. So, I don’t think it is a question of either/or. I think it is either/and, and some of these measures can help to accelerate and ensure that those people who are not able to participate—or would be left behind—can begin to access energy at the same time.

I do not entirely understand your question, but we do focus on the affordability of products, ensuring that these products are fit for purpose. For example, solar—

Can I just shift you a little bit? I do not believe it is about the affordability of the product. It is about if state or charitable investment is effectively propping up businesses or crowding out private investment.

Thank you. There is a time and place for UK aid around funding these innovations that have yet to be proven and then getting companies that are showing commercial viability to a certain stage to access the next round of capital. The way that we do this is we structure our deals through specific milestones. Companies have to show that they have reached a certain number of customers; that they are getting good feedback; that they are raising a certain amount of capital, to then be able to graduate to the next stage. At times, we are asked to invest again into the same company or the same partnership, and we look to understand whether we are propping up companies that would otherwise fail. We have failed in the past but, along with the FCDO, we seek to make these bets with companies that show us the proof points that they are getting to a certain stage where they will no longer need our investment. We also leverage our partnerships with the FCDO to explore other revenue avenues, such as carbon credits. I have talked about the deal with SunCulture and BII to show how carbon credits can be used to bring down the cost of a product.

We work with the private sector, but it is certainly not the be-all and end-all of what we do. Yes, we work with and support and encourage innovation with the private sector companies that we work with. When we work in any given country, we talk about the progress in addressing the clean cooking challenge as a jigsaw. That means that not only do we have to work on the supply chain and the entrance into that supply chain. It is also the things I was talking about earlier, about regulation and the quality of the goods. We work closely with CLASP who is actually coming on board with Maxint in the next iteration of the programme. We also work with the World Bank directly. So ESMAP is a partner in our programme, which gives us the ability to influence the funding decisions of the World Bank country teams across the board in the decisions that they take over energy system development, and indeed support towards clean cooking. We also work with national Governments in strategy development, readiness assessments and, as I was mentioning, with local government, so that there is an element of purposivity—if that is a word; it is now. It sounds quite good, doesn’t it? What I mean by that is you could support private sector within a country and each private sector will go in and say, “We want to help you with your productive uses in this area. Let’s develop your business in this”. You may find that different organisations are going to compete with each other—and that is great, it is competition—but by the same token, with limited resources and limited abilities of meeting that demand, you may be better off in an old integrated rural development or urban development way, working with the local authority to channel its resources alongside your resources into specific localised projects, and so on. That is something that our energy delivery model has done in the work that we have done in Kenya.

I can give an example of something we have not talked about yet: using innovative financing tools to create other sources of revenue, such as results based financing, which can create value where perceptions of value are not there. For example, along with the FCDO, we work with Odyssey—which is an asset management platform for mini grids and other productive use assets—to fund projects to transfer PUE assets to women in particular, and the distributors are paid based on accessing more women. This was based on a piece of research that we commissioned with CrossBoundary that identified the huge RBF opportunity to target women specifically through PUE. That is just an example of leveraging different pools of capital that exist for specific outcomes that can help speak to the sustainability piece.

The report identified that there was an opportunity to tap into RBF capital if more women were reached. Women using these PUE assets was going to improve their economic livelihoods and create a huge amount of economic value for them. Thanks to Odyssey, which allows close tracking of the deployment of these PUE assets, you can see very clearly which assets have been deployed where and, once those are deployed, then distributors get paid.

I have one example, which is from one of the demonstrators that I was talking about. We are in the middle of an annual workshop at the moment, and our team that work on the Tanzania project are here. We have been working in Tanzania for probably five years on the project. We started off by doing detailed research on cooking approaches. We used cooking diaries and selective choice types of work. We did loads of interviews with different stakeholders, and we supported companies and organisations in pilots, and so on. That can get us to a certain point. We could have left it at that, or if our funding had ended, we think that there would have begun to have been change. However, with the funding we have had from FCDO Tanzania, having seen what we had begun to build and the change in attitudes that had been created, it wanted to invest in embedding this more fully. We work with the FCDO and local organisations in Tanzania. We have helped them develop the certification programme. We helped them develop a programme with the utility and trained their engineers in the possibilities of cooking with electricity, giving money to start ups and other established companies. Basically, a six-prong programme, £3.5 million developing this market. Again, at the end of this period, we could say, “Right, we have done what we can in Tanzania, things will move forward on their own volition”, and we could embed some seeds in other countries, or go back and do something else if we are not being funded.

No, that is what we are intending towards but, with something like this—this had not happened in an African country before—we were taking risks, but it is bearing fruit. The thing now is, if FCDO Tanzania come back to us and say, “We really like what you’re doing. We like how this is moving forward. Let’s ensure that we can grow this further. Work with us in these different dimensions”, or “The Ministry of Energy can come and talk to us like that”, we can make sure that we embed it within, for example, the Tanzanian Government’s Mission 300 concept. That is something that we are trying to do at the moment: embed ourselves in the Mission 300 process so that, whenever there is investment in an electricity system, they are taking the opportunities for electric cooking seriously, but they need support in terms of the experiences that we have had with Governments and with the private sector in what works and what does not work.

I want to take it from a slightly different angle, because sustainability means different things in different contexts. There is the sustainability of interventions in the sense that maybe once you step away, the community is empowered, is enabled to own the solution and can earn a living from it. Another step further is to say, well, there are also still, from an environmental perspective, unintended consequences that could happen, or benefits that might not be derived because of the way that projects are designed. For example, a cold room could be deployed with farming co-operatives to help take to market avocados for export markets. The farmer has benefited. Their income has increased, but from a sustainable development goal—so a sustainability perspective—it has not helped with food security in the domestic markets, and it could lead to unsustainable farming practices because it might drive different behaviours. Where I wanted to come from there is that a great lot of work has been done to couple the climate and energy access sectors, especially through the Ayrton Fund, and that has been brilliant. The disruptions in funding and the uncertainty around funding over the past four years have hindered the real progress and collaboration that could have happened. It is quite well co-ordinated now, but there is more that could be done to join things up, and joining up now with other sectors, like the agriculture sector, and looking at how we can work together—we see a lot of these social enterprises and co-operatives are all working in those sectors. So, trying to join up across the energy access sector and the ag sector is something—we have just published some research around it called “Breaking Down Silos”, which I can forward on to you after this.

We believe that the partnership that we have with the FCDO has been instrumental in advancing clean energy solutions that meaningfully impact lives. We would like to see the time and programmes continue, because we think they are highly effective, and—as I mentioned at the beginning—they are good value for money. We understand that cuts need to be made, and we have two recommendations: the first being internationalising the Ayrton Fund—bringing in other sovereign donors and private capital and private philanthropies, such as the Ikea Foundation and the Shell Foundation—which already fund TEA platform—and then focusing on scale. This is something that was mentioned by the previous panellists. Innovations do exist and are out there, but the challenge is scale. The challenge is implementation. How do we focus the scarce resources that do exist on those innovations that will reach millions? We believe the private sector can help do that. Distribution partners that have not been considered, which already work with a low-income customer, can help do that.

With clean cooking, the challenge remains astronomical. It is a massive challenge. We are seeing significant take up of the ideas that FCDO has allowed us to promote globally. We feel that the job is not even half done, so in that sense we really hope that we will continue and expand this relationship, both with FCDO and with other sovereign partners, and all the various organisations with which we are already working.

I want to jump in on cooling as well, because there is still an awful lot of work to do around cooling and, in particular, space cooling because the only solution that exists at the moment is a fan for off-grid customers, and they are ineffective in a large part of the world where it is dry and arid. They only really work in humid conditions. So, it was really interesting to hear about the vests and the cooling tents, because there is a huge amount of work to be done to develop solutions to help people cope in extreme heat.

Thermal comfort.

Are we done? Thank you. That was really interesting, and your passion comes across loud and clear, which makes it very difficult for a Chair, but very interesting for our inquiry, so thank you ever so much for that.

Thank you for having us.

We really appreciate it. Thank you very much, team.