Ending energy poverty: An interview with Pact's Matthew CullinenAugust 21, 2018
For years, Pact has worked with rural communities in Myanmar to improve their lives. With its partners, the organization has helped villages make dramatic change in areas including health, water and sanitation, agriculture, livelihoods and access to credit. But a major need was going unmet: electrification. With little grid access, progress in Myanmar’s rural communities – particularly in the area of economic development – was stalling. So Pact devised a solution to bring solar home systems to villages. For families and small business owners who before had relied on expensive and unsustainable alternatives such as wood, candles, kerosene and diesel, solar has been life-changing.
But solar home systems alone are not enough to deliver the electricity needed to power real industry, and energy poverty extends far beyond Myanmar. Globally, more than 1 billion people lack reliable electricity. The need is especially great in Africa, where Pact has an extensive footprint.
This is why, in May, Pact formally launched a new global program, Energy for Prosperity, or E4P, to bring affordable, reliable and sustainable power to low- and middle-income communities. E4P is designed specifically to overcome systemic barriers perpetuating energy poverty.
Matthew Cullinen is E4P’s senior director. Before joining Pact, he led research and program development for several initiatives at Carbon War Room and Rocky Mountain Institute, and headed their Asia-Pacific office. He has also served as a chief of staff at the Connecticut-based hedge fund Bridgewater Associates and as a consultant for Generate Capital, a clean-energy finance company.
Here, Cullinen discusses E4P and the importance and future of ending global energy poverty.
Why is energy access so important for developing communities?
Cullinen: Energy is essential for improving lives and increasing economic opportunity. Without light people can’t read at night, reducing educational outcomes. They can’t engage in higher value-add commercial and industrial activities.
Modern health care facilities require significant amounts of power. Diagnostic equipment, life support, refrigeration for vaccines, and even lights to operate under are essential for decreasing mortality rates and improving the quality of health care. Natural resource management is also inextricably tied to energy – many communities that lack access to modern energy services rely on biomass for light, heat and cooking, which can lead to depletion of forests and ecosystems, as well as premature death from smoke inhalation.
What do you see as the biggest barriers to energy access?
The challenges really differ based on the specific electrification pathway – extension of a utility grid, development of a mini-grid or use of a product such as a solar home system – and to some extent on the unique circumstances in each country. But the barriers generally fall into three categories: technical, economic and institutional.
Technical challenges relate to the implementation of energy projects, such as difficultly forming and managing energy companies, identifying and/or acquiring customers, forming partnerships and other business relationships and recruiting and retaining talent.
Companies, governments and individuals face economic challenges related to raising the capital needed to produce, acquire, sell, buy and use energy products and services. There are also economic challenges related to raising sufficient capital for starting energy companies and building energy infrastructure.
Forming fully functioning markets for energy products and services can present significant institutional challenges. Markets often lack long-term planning and clear legal structures, incentives, mandates and systems of governance and enforcement.
How is E4P working to overcome those barriers?
We first need to recognize that a lot has been done to try and overcome these challenges. Some of those efforts have been successful and others have failed. This is a complex global challenge, and there is no room for competition, so we must learn from past experience and work in partnership with the many talented people who have devoted their lives to eradicating energy poverty. That’s why we’ll always seek to find ways to complement existing efforts and build new solutions with input from others.
Solutions generally fall into four main categories: supply-side, demand-side, policy and governance, and finance. As we evaluate the landscape, we see gaps mostly related to demand and finance. There has been a dearth of solutions designed to help end-users determine their needs, how best to utilize energy products and services, how to identify the best products and services, how to work together to get the best possible price and how to pay for them.
Luckily, Pact’s capabilities lend well to addressing these challenges. As an organization that works on the ground in nearly 40 countries, Pact has developed deep relationships with communities and has a long track-record of offering micro-finance, which allows us to implement solutions in ways that few others can. As an organization committed to integrated development, we’re also well-positioned to address energy poverty as part of a comprehensive set of programs, products and services that solve interrelated drivers of poverty and marginalization.
Why is a systemic approach that collaborates with both the public and private sectors so critical?
Electricity is considered a utility, just like water, sewage and telecommunications, and some may argue the internet as well. One of the fundamental roles of government is to ensure that people have access to these basic public services through regulation, investment and, possibly, construction and maintenance. Private companies often build, own and operate energy infrastructure, or sell energy products and services. But without clear rules of the road and support mechanisms, progress usually lags.
There is a lot of talk about public-private-partnerships. But what does this mean? Often we talk about the creation of one-off projects that involve some collaboration between the public and private sectors. If we’re going to be successful in our efforts to supply electricity to more than 1 billion additional people, close coordination between the government and the private sector needs to become an engrained part of the system, not an extra-ordinary arrangement for specific projects.
Pact is hosting the new Smart Power Myanmar initiative. Describe this effort.
We’re very excited to lead this new initiative with financial support from the Rockefeller Foundation. Smart Power Myanmar is an integrated country platform for facilitating rural electrification, building on the Foundation’s experience in India. Our goal is to nurture the distributed renewable energy ecosystem within Myanmar, so we can accelerate both the speed and scale at which energy infrastructure is built.
An excellent team in Myanmar is going to do that by providing a suite of services, including project development support, investment facilitation and business modeling for energy services companies, as well as support for small businesses and households to secure the appliances and equipment they need to productively use electricity. Smart Power Myanmar will also provide policy support and industry coordination, and gather market intelligence that we will share with all interested stakeholders.
What do you envision for E4P five or 10 years down the road?
International development organizations really should be the tip of the spear when it comes to implementing solutions for overcoming energy poverty, but they haven’t been to date. One of the main reasons for this is that energy infrastructure is highly capital-intensive and requires a commercial perspective, as well as an ability to influence policy. The skills and mind-set required to address energy infrastructure challenges and help governments carefully craft an enabling regulatory environment are quite different than what is typically required for implementing aid projects.
We have a tremendous amount of knowledge and expertise, so I’m confident that we can adapt our approach by building up our ability to design long-term, systemic solutions with a clear business case. In the coming years, Energy for Prosperity will design and incubate social enterprises that leverage our deep community relationships and other key assets, allowing us to solve challenges in ways that we believe are scalable.
In ten years I want to put us out of a job. We’re aligned with the broader global community committed to achieving universal access to energy by 2030. Energy for Prosperity today represents an ambition, but we hope to make it a reality for the many people who want to start new businesses and raise healthy, prosperous families.
Learn more at pactworld.org/energy.
Reach Matthew Cullinen at email@example.com.
This interview originally appeared in Pact's e-magazine, All In.