The Story of Goecha La – Insights on Sikkim & The Business of Himalayan Trekking

I have recently returned from the incredible experience of trekking Goecha La, a 5000m (16,500ft) pass in the North Eastern Himalaya in the Indian State of Sikkim. The state of Sikkim is a world of its own when compared with much of the rest of India. The least populous Indian state, squeezed in between China & Tibet to the North, Nepal to the West, Bhutan to the east and the Indian state of West Bengal to the south, may have more in common with Nepal or Tibet than with India. The state has a rich history of Buddhist influence largely stemming from Tibetan invasions as early as the 9^th century. After invasions from the Tibetan, Bhutanese & Nepalese Kingdoms over the next few centuries, an initial popular vote in 1947 rejecting entrance into the Indian union, and finally another referendum 28 years later in 1975 to abolish the Sikkimese Monarchy and join the Indian nation, the modern day Indian state of Sikkim was formed.  Still today the working language in Sikkim is Nepali with many other Himalayan languages such as Bhutia being commonly spoken as well (Many people, particularly migrants from the Indian plains would also speak Hindi, and many in the tourism industry will manage with a bit of English as well). Located at the union of two ecozones, Sikkim is also blessed with an extraordinary biodiversity rich in hundreds of varieties of flora and fauna and is home to 36 varieties of Rhododendron, more than 500 species of birds, and the endangered red panda.

The Goecha La (“La” is a Tibetan word translating loosely to “Pass”, as in a high mountain pass) trek starts from the lovely hill town of Yuksom, the first capital of the Sikkimese Monarchy established in the 1600s, with a modern day population of about 2000 people. The town is primarily reliant on income from tourism in order to supplement basic farming and tending to livestock.  Yuksom is a smooth 7 hour jeep ride traveling 150km (90miles) from the nearest airport in the neighboring state of West Bengal with the ride following a large and heavily dammed river up winding, crumbling mountain roads bringing you from almost sea level in West Bengal up to about 6,000ft at Yuksom in the foothills of the Himalaya.  Due to the numerous hydroelectric dams on the Rangeet & Teesta rivers in Sikkim more than 90% of the state has regular power supply, according to government figures (Compare this to the 25% of India, or more than 300 million people without regular access to electricity according to the World Bank), and the state is also able to export some of this power to the neighboring states of West Bengal, Orissa, Jharkhand & Bihar serving as an additional revenue source to be used ideally by the government for development projects, but also leaves the potential for corruption and filling the pockets of government officials. These dams don’t exist without concerns over negative impact on the environment and the local populations that depend on the livelihood the rivers provide and as such there have been a number of local protests against the expansion of hydroelectric dam projects. In a state where many high altitude mountains and almost all lakes are declared as holy sites, protected from development and banned from recreational use, it is interesting how this devotion has not necessarily been extended to the rivers, at least by the government. The conditions of the roads in Sikkim provide a stark contrast to the electricity situation, with landslides regularly washing out the rickety roads and traffic jams grinding transport in and out of the sleepy hill towns to a halt. Unless you are ready to spring for a private helicopter ride, the only way to travel to these towns is by regular shared jeep service; service to hill towns like Yuksom, leaves only once a day and expect Nepali music blasting throughout the ride. Another noticeable difference of Sikkim as compared with the rest of India is the overall abundance and ease of access to alcohol. It seems that in most little towns in Sikkim there is a restaurant with a bar on every street corner, with the bar opened as soon as breakfast is being served. The increased consumption of alcohol may partially exist out of the “necessity” of coping with the tough conditions of mountain life (Tongba is a popular noncommercial alcoholic beverage prepared by the rural Sikkimese people consisting of fermented rice millet in a bamboo mug. Hot water is added to the rice millet to make it drinkable. Multiple pours of hot water can be added as needed.) but I imagine is also a result of the large amount of commercial alcohol production in the state of Sikkim. Sikkim is home to a number of large Indian breweries & distilleries, not to mention the collection of revenues by the Excise Department, the government agency responsible for regulating the manufacture, possession, sale & transport of alcohol in Sikkim, from license fees, fines & various levies on sale of liquor are one of the state’s largest sources of income. Alas, according to a pair of Sikkimese doctors who joined us on the trek, alcohol related illnesses & injuries are one of the main reasons for hospitalizations and doctor’s visits in the state.

[As a clarification, any “mountain” without snow in the Himalaya (Himalaya is literally Sanskrit for “Abode of Snow”) is generally referred to as a hill. These hills could be up to 10,000ft and beyond. Furthermore most “mountain peaks” below 6000m are generally referred to as a pile of rocks. This begins to make sense when you consider that the Himalaya contain all 14 of the world’s 8000m (~26,500ft) peaks and literally hundreds of peaks higher than 6000m (~20,000ft)]

Once the trek begins from Yuksom, you quickly enter Kangchenjunga National Park, an 850 sq. km (330 sq. mile), covering 10% of the land area of the state of Sikkim, and home to the world’s third tallest mountain residing on the border of Nepal & Sikkim, Kangchenjunga (Meaning “The Five Treasures of Snow”) at 8586m (28,169ft). To date there have been fewer than 200 ascents of this snowy treasure with 40 registered fatalities (compare this to the more than 5000 ascents of Everest nearby in Nepal); every climber of Kangchenjunga has stopped a few meters short of the summit to pay respects to the local Sikkimese people who regard the mountain as sacred and a guardian deity of the state.

The first two days of the Goecha La trek are a steep & steady ascent from Yuksom, climbing about 2000m (~6600ft) crisscrossing a rumbling high mountain river, passing through dense forests of magnolias, red, pink & white rhododendron, and hemlock, firs and other conifers as the elevation increases. As you continue to climb you reach the shifting snow line and the more permanent tree line where the world changes from thick surrounding forest to wide open views of the surrounding snowy peaks with the flora characterized by the shorter rhododendrons and hardy juniper bushes, some of the few plants that are able to survive in this harsh environment and known locally for their healing abilities. There is even a local tradition where the guides burn a small patch of juniper bush and wave it around the room as good luck for the upcoming day (This ritual also exists in Nepal). Eventually we reached the trekking hut in Dzongri, within an hour’s walk of some of the grandest views of the eastern Himalaya and the Kangchenjunga Range, where we would rest the night and prepare for our early morning hike to catch our first glimpse of Kangchenjunga.

The day started at 4am slowly rolling out of our sleeping bags, braving the ice cold air and still damp boots from the previous days trudge through wet snowy conditions. It was a nearly full moon and the light & clarity of the night sky quickly inspired any physical discomforts to easily dissipate. Under the stars of the night sky and the shining moonlight we began our short 40 min hike to the Dzongri viewpoint where we would watch the sunrise over the Kangchenjunga Range. As we made our way around the curve of a hill blocking our forward view, the first morning glimpses of snowy peaks appeared to us with the snowy tops subtly reflecting the bright moonlight. After rounding the bend the massive Kabru peak & glacier appeared looming in the distance rising above Dzongri La starting to receive some of the earliest rays of sunlight. At this point I realized that this pass would be my morning destination. Rather than wait around at the hilltop viewpoint for the sun to rise I knew I had to press on towards the snowy pass in order to get a more up close and personal viewing with these majestic Himalayan peaks. With my destination clearly in view, I let summit fever take control and I hiked another 1.5 hours up the snowy trail to come face to face with these grandeurs of nature, Rathong Glacier, the source of the Rangeet river, & Kabru Peak, the southernmost 7000m peak in the world. By the time I reached the pass the sun had risen and was beaming off of the thick white snow pack atop these glacial peaks, but I was still protected in the shade by a lesser Himalayan ridge line. By around 6am the sun started to creep up over the ridge line and as the rays reflected off of the blanket of surrounding snow the whole ground cover began to glisten. A smooth hours walk back down to Dzongri gave me the chance to make it up to the Dzongri viewpoint by a little after 7am where I was still greeted with clear skies showing a full panoramic view of the Kangchenjunga range including the views I had so recently seen of Rathong Glacier & Kabru Peak, but also my first glimpse of Kangchenjunga, and views of the right hand ridge of Pandim, another holy Sikkimese peak, Tenzing Khang, where three climbers from Colorado were beginning their 15 day ascent, & Japuno, aptly named after a Japanese man who was the first to summit this peak. From this viewpoint you could also see the valley where we would continue our trek with Kangchenjunga on our left and the 3 peak ridge of Pandim, Tenzing Khang, & Japuno on our right. This mostly barren valley was dissected by a meandering river fueled by glacial melt and served as a wind tunnel funneling high powered winds in between the high mountain walls on each side. The night before our camp at Lamuney, the final campsite before the long night trek to Goecha La, another group of campers at Lamuney lost their tent to the high winds during an overnight snowstorm. The weather can change in an instant in the high Himalaya and the landscape could turn from clear blue skies to thick fog rolling up the valley and completely enveloping the campgrounds, reducing visibility to 10 feet in under an hour.

After a short nights rest, the trek up to Goecha La began at 2:30am, again under the company of the shining light of the full moon. The sound of the strong winds whipping through the valley and the snowy reflections under the moonlight create an otherworldly kind of atmosphere. Add in the night trail ascending up through fragments of rock and boulders that have made their way down to “ground level” through the constant process of erosion facilitated by landslides and avalanches and the diminished levels of oxygen at this altitude and it feels as though we could have been walking on the moon. Except for at this altitude of about 4500m (~15000ft) and climbing it is impossible to forget about the effects of gravity making each step forward and up more of a challenge than the last. After passing by a frozen alpine lake we continue or ascent to the first Kangchenjunga viewpoint reaching by around 4:30am just in time for the sunrise to come beaming in from over the eastern mountain ridge lighting up the western ridge with a morning glow. As the atmosphere heats the sun’s rays seem to dissipate the cloud cover opening up grand views of the Kanchenjunga Massif and close up views of Pandim. After soaking in the views over sunrise, we begin the final approach to Goecha La. The 2 hour trek starts through a flat, dry riverbed that could potentially be the future home to one of the world’s highest seasonal cricket fields and continues up through the bizarre high altitude landscape full of red moss and small plant life that look like they could be features in an ocean coral reef. The final ascent to the pass is a steep climb winding through massive fallen boulders and up the rocky side of Pandim’s base. For the last 15 minutes of the climb Kangchenjunga’s peak peers out above the clouds guiding us home to our final destination, Goecha La. From here we enjoy the closest views of the southern face of Kangchenjunga that can be seen anywhere in the world and are only a day’s walk from the Sikkimese base of the sacred mountain. From this close range, the iconic pointed peak towers over us allowing you to easily see close up features and the dense icepack ledges hanging over the face and extended ridgeline of Kangchenjunga. Truly lying in the shadows of Kangchenjunga, the trail ends here at 5000m and we begin our steady multiday descent back to Yuksom with the vision of the Five Treasures of Snow forever ingrained in our memory.

Supplies for the trek including food, fuel, cooking supplies & camping equipment are carried up the steep slopes by a team of dzos, a local cross breed between a yak and a cow. Our trekking team also included a guide, 2 porters, a cook, and a “yakman” who tended to the dzos, including foraging for their food.  Although the average local cost for this kind of trek equates to about $30 USD per day per person (advertised as high as $90 USD per day over the internet by agencies run out of larger cities, predominantly aimed at foreigners traveling long distances to reach the trekking area who are more likely to confirm and pay in advance and have different ideas of “affordability”), a guide will only earn an average daily salary of Rs 1000 ($20 USD), while porters & cooks generally earn closer to Rs 250 per day ($5 USD), which is a general rate for day laborers of all kinds throughout India. The “yakman” will generally earn about Rs 250 per animal (Our team had 4 dzos). Assuming a group of 5 trekkers (some groups are as large as 40) each paying Rs 1500 ($30 USD) per day for the 8 day trek, the agency takes in about Rs 60,000 for the group. The labor costs the agency Rs 2500 per day for the entire group totaling Rs 20,000 for the 8 day trek. Add in the cost of the trekking permits at Rs 1000 per person and the cost of simple vegetarian food for 8 days and the agency is still making around Rs 30,000 per trek compared with the Rs 20,000 earned by all 5 of the trekking staff combined. You can see how even at $30 USD per day the trekking agencies make a lot more money in this situation than the people doing the physical work, although the agencies are also responsible for maintaining quality gear. This is a classic example of abundance of labor impacting wages. The work performed by the guides, cooks & porters, although physically demanding, is easily learned by many of the young men in Sikkim and Darjeeling. The abundance of labor in this context is no different than the general abundance of unskilled labor throughout India keeping wages relatively quite low. However based on the costs of living in these remote mountain areas, the porters, guides and cooks are actually doing quite well for themselves, especially when it comes to living conditions, when compared to the urban and slum dwelling poor in India’s large cities. Considering that the 6 months per year of peak trekking season (Mar-May & Oct-Dec) provide almost solidly booked work for the trekking staff, just on wages alone porters can expect to make peak season monthly income of around Rs 7500, with guides earning closer to 30,000, not to mention tips which could easily add 50% to their income per trek. Generally, the trekking staff are part of a tight knit community helping to facilitate tourism throughout the surrounding local towns. Many of the staff therefore are able to secure temporary housing for the trekking seasons at around Rs 1000 per month, some even staying for free with extended family & friends. Add in 50kg of rice, going for around Rs 1000 and lasting for up to three months, some potatoes, lentils, and the occasional treat of some form of meat and their recurring monthly expenses aren’t much more than Rs 2000. Furthermore, some of the trekking guides & porters take advantage of the summer trekking season in Ladakh where they are able to earn income for the months of June-September during the rainy offseason for much of the Nepali & eastern Himalaya. It begins to make sense then how many of the trekking guides can be seen around town after treks wearing flashy new jewelry, watches, sunglasses & clothes, even if only for an afternoon before heading back up the mountain the next day. These men who make their livings trekking through the endless natural beauty of the Himalaya aspire to a level of materialism just like their western counterparts who arrive equipped with the latest trekking gear & technology and with whom they interact with so regularly on the mountain trails. Interestingly enough, many of the trekking agencies are headed by former guides who have aged beyond the time where it is desirable to haul goods up and down these steep mountain trails and are happier to use their accumulated resources, entrepreneurial spirit, and likely their good connections with the government officials approving trekking permits, to make a living closer to home.

It is really an interesting phenomenon taking place not just in Sikkim, but throughout Nepal, North India and most of the Himalayan trekking hotspots. Truly a colliding of two worlds, with western travelers and adventurers seeking an entrance to the wild, natural beauty of the high Himalaya and an escape from the materialism, hustle and bustle of modern day life. All the while their trekking & mountaineering guides, their eastern counterparts, are striving and aspiring to a better, possibly more western & consumption heavy, lifestyle where they are able to accumulate more resources to provide for their families in addition to showing off their status symbols around the community. This collision of worlds has the potential to fuel conflict, like the recent fight between European climbers and Nepali Sherpas at Camp 2 on Mt Everest at 21,000ft. Western adventurers who may not be so keen on the commercial aspect of Himalayan trekking & climbing may forget at times that they are in someone else’s home and workplace and that these people are just trying to make a decent living for themselves and their families, although there would rarely be reason for the violence seen in this case by the Sherpas on Everest. With each world, east and west, having an almost inevitable influence on the other we can only hope that people from both worlds will learn valuable lessons from each other through their ongoing interactions and are able to maintain and foster an atmosphere of understanding and mutual respect with a vision to jointly improve the fate of the entire Himalayan region, the heavenly abode of snow.

Microfranchising & Meso-Lending in India

According to a report from the Acumen Fund, a pioneer and leader in the impact investing world, microfranchising is “a development tool that leverages the basic concepts of traditional franchising, but it is especially focused on creating opportunities for the world’s poorest people to own and manage their own businesses.” In this way, microfranchising harnesses the ability of the traditional franchising model to easily replicate a proven business model in order to provide sustainable income generating opportunities through self-employment for people living at the base of the economic pyramid. Companies in India like Eco-Mithra & Orb Energy have both had success using the microfranchising model in order to grow their respective businesses while providing opportunity for aspiring entrepreneurs as well.

Eco-Mithra is a manufacturer of eco-friendly and biodegradable plates made out of areca plant bark. Local to South India, the bark of the areca plant was generally seen as a waste product and discarded as such. Yogesh, Founder of Eco-Mithra, saw this as an opportunity and created a business around the manufacture of these eco-friendly plates from the cheap and bountiful areca bark. In addition to manufacturing the plates, Eco-Mithra provides microfranchising opportunities by selling Areca Plate Machines to franchisees, providing basic training and even buying back finished product. Meenakshi, an Eco-Mithra franchisee with no formal education, was able to start her own business manufacturing the eco-friendly plates with the help of a 3 day training period provided by Eco-Mithra and a guaranteed contract to purchase plates for her first year of business.

Orb Energy is a provider of solar energy solutions from household solar power systems to solar water heaters and solar lighting accessories. Orb Energy’s solar products provide access to clean, reliable electricity for off grid households which have previously relied on costly kerosene lanterns which provide poor quality of light, emit harmful fumes and run the risk of in home fires. Access to electricity allows for increased productivity, as the day’s work can continue longer and children are able to study later into the night, increased connectivity, as mobile phones can be charged at home, cost savings and health benefits from reduced use of kerosene. Orb Energy is able to access a large customer base through its branch network of more than 100 stores, each owned and operated as a franchise by a local entrepreneur. Through these retail outlets spanning 5 south Indian states, Orb Energy is able to provide products, installation and maintenance support locally all with a focus on customer satisfaction.

In India, one of the biggest challenges for these micro, small & medium enterprises (MSME) is access to financing. In the current funding ecosystem for MSMEs this need has not been satisfied by the small loan sizes of the microfinance industry or by the restrictive demands of the traditional lending sector, which generally perceives lending to these businesses as too risky. Using innovative lending models, lending companies like IntelleGrow, a Mumbai based venture debt financing company, & Kinara Capital, a Bangalore based MSME lender, have been able to fill a vital need for these enterprises by providing growth financing and working capital loans which effectively fill the “missing middle” between microfinance and traditional lending. IntelleGrow provides early stage, flexible debt financing and skills support for growing impact focused businesses across India, such as Orb Energy, and to date has disbursed 20 loans totaling $3 million with an average loan size of $150K and zero defaults. IntelleGrow recently raised $2 million in Series A funding from the Michael & Susan Dell Foundation in order to expand their successful lending practice. Kinara Capital provides working capital loans in the range of $2K-$20K to micro and small businesses in South India, such as Eco-Mithra & Orb Energy Franchisees, and to date has disbursed more than 100 loans totaling $550K with a 100% repayment rate. Kinara Capital also recently raised $1 million in Series A funding led by an investment from the Sorenson Impact Foundation in order to grow their field lending operations. By partnering with and lending to growing companies like Orb Energy & Eco-Mithra, lenders like Intellegrow & Kinara Capital are able to support job creation in addition to supporting the social missions of the respective organizations all while simultaneously growing successful enterprises of their own. As Thomas Friedman once wrote in the New York Times, “People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts.”

Kinara Capital – Borrower Profiles

Low Cost Smartphone Based Psychometric Credit Assessment for Micro and Small Businesses in India

As I mentioned in a previous post, there is a huge demand for credit of around $198 billion among micro and small businesses in India which make up a hugely important section of society responsible for a significant portion of the country’s job creation and livelihood support, especially among low and unskilled workers. The inability of these enterprises to gain access to credit stunts their ability to take on new contracts, bridge working capital needs, expand existing capacity and hire new workers. There is a huge lending gap here for these micro and small enterprises that is not currently being addressed by the microfinance sector or commercial lending organizations. One of the main reasons that these businesses are unable to attract debt financing is that they may lack the sophisticated financial projections and documented credit histories that are required by banks. Lack of documented financial history is also an issue for venture capital investors that are looking to invest in early seed stage companies, however with potential venture capital investments the potential for a huge upside allows VC firms to spend a significant amount of time and money doing analysis on potential investments. This type of financial upside is not normally present in a growing micro or small businesses operating in rural India. Banks also could potentially lend to early seed stage companies however the cost of diligence is often a prohibitive factor for performing the needed diligence on small loan sizes with the associated smaller fees. On the other side, non-traditional lending sources like microfinance groups or Kinara Capital typically base lending decisions off of the field staff’s ability to evaluate a borrower which is often bias driven and highly dependent on a high level of trust that must be developed between the lending institution and the borrower. This trust based model has proven quite successful in microfinance, especially with the community based joint lending model, however the trust based joint lending model tends to limit the ability for more risk taking entrepreneurs to access growth capital that they may need to grow their enterprises. Kinara Capital has also utilized this trust based model to lend to these risk taking entrepreneurs by seeking references from channel partners, typically a large buyer in the borrowers’ distribution channel, and having face to face meetings regularly with borrowers in the field. Again this has worked quite successfully thus far. However, as Kinara’s business scales and there are multiple loan officers in the field evaluating the creditworthiness of borrowers with very limited financial data, risks begin to appear with the trust based model. There is often the potential for individual bias to affect the credit assessment of a borrower and the need for a more scalable and cost effective credit assessment becomes clear.

Psychometric test models have been used successfully in the past throughout the western world for recruiting and talent management. More recently the technology has been used to evaluate entrepreneurs for potential investment from venture capitalists and as a credit assessment tool for lenders in the developing world. Groups like the Entrepreneurial Finance Lab (EFL), from Harvard’s Center for International Development, have developed and implemented a psychometric credit assessment for lending institutions and venture capitalists across the developing world focusing mainly on Africa & Latin America. Research has shown that psychometric tests are an accurate method of determining a borrower’s character & willingness to pay and they help to reduce loan default rates 20-45%. As the psychometric test allows for borrowers without a documented credit history to obtain access to credit, the test helps to foster financial inclusion with new borrowers developing and building credit histories over time. Furthermore, a psychometric test can be designed for use on a mobile application and integrated into a cloud based loan application system. This allows for the test to be given via a mobile phone to borrowers in remote areas with the results being automatically scored and reported to the loan application system. This model is lower cost than traditional credit assessments allowing for greater and more cost effective outreach to new borrowers in addition to providing a tamper proof system that removes the potential for field officer bias. This field bias can often be directed particularly towards women entrepreneurs who can be rejected for credit because of non financial barriers such as lack of formal education and other cultural barriers preventing interest in female clients even though statistics have generally shown that female borrowers have better loan repayment rates. The psychometric test model will allow for a platform to better assess the creditworthiness of female borrowers while removing the cultural bias that may have led to the limited access to credit for women entrepreneurs in the past.

Kinara Capital now plans to design and implement a low cost smartphone based psychometric credit assessment for micro and small businesses in India. As with any innovative product design for base of the pyramid (BoP) consumers, regional and local intricacies are extremely important. Kinara Capital plans to utilize its current experience and extensive network from lending to micro and small enterprises in Karnataka and Tamil Nadu in order to design a user friendly psychometric test model calibrated for the Indian psyche. This model will incorporate at least three languages (Kannada, Tamil, & English and potentially Malayalam & Hindi) and will be field tested and refined for user friendliness and effectiveness by using the existing field staff and borrower network. In the pilot phase, Kinara Capital’s loan portfolio of $550K created more than 300 jobs and boosted incomes by more than 50% for 60 businesses. The accuracy, scalability and cost effectiveness of the psychometric test model will allow Kinara Capital to expand its current lending base at a much lower cost resulting in access to credit for many more entrepreneurs than would otherwise be possible. With the help of the psychometric credit assessment tool, Kinara Capital hopes to create more than 100K new jobs in the next 5 years while continuing to improve incomes by 50%. While Kinara will be facilitating the implementation of psychometric credit assessments for lending to micro and small enterprises in Karnataka and Tamil Nadu, other organizations around the world, including EFL, will be implementing similar psychometric test models in their local context allowing this innovative credit assessment tool to make a positive impact on people around the globe through job creation and financial inclusion.

Largest Solar Cooking System in the World – Shirdi, Maharashtra, India

The Dawn of Solar

Humankind has been mesmerized by the power of the Sun for millennia. The idea of a sun deity is pervasive across many religions, cultures & geographies including the Egyptian Sun God, Ra, the Hindu Sun God, Surya, the Greek deity Helios, and numerous other examples throughout the Aztec Empire, Native American tribes, Buddhism & ancient Mesopotamia. Since the origins of agriculture 11,000 years ago in the Fertile Crescent, we have been learning to harness the power of the sun to grow crops to feed our hungry population. Now we are turning again to our solar system’s life force to feed our energy hungry world with Solar Power.

Energy is one of the most essential parts of our global society. Access to energy is intertwined with most of the key economic functions of society as it is necessary for modern day agriculture, waste & water management, heating & cooling, transportation, communication, industrial, commercial & residential uses. As we consider ways to combat the societal effects of global climate change, a sustainable energy policy including solar energy is an essential tool in order to provide us a way to reduce pollution & future greenhouse gas emissions from fossil fuels while also ensuring that we have a renewable and cost effective source of energy to sustain the necessary societal systems.

The solar energy industry has been around for more than 50 years now and the benefits & potential of the industry to power the world are not a huge secret. The Sun produces an abundant, renewable, & clean source of energy that is capable of fulfilling all of the world’s current energy demands however there are issues with intermittency, storage & transmission of energy, and of course cost competitiveness with other energy options such as oil, natural gas & coal. However within the past few years we have seen the economics of solar energy shift in a positive direction with the prices of photovoltaic (PV) cells plummeting due to the increase in supply, mostly from Chinese producers.

The current usage of solar energy in the world is still only about 0.25% of the world’s total energy consumption, however the installed capacity of solar power is increasing around the world at an incredible rate. Installed capacity has more than doubled in the past 2 years from close to 40GW to more than 100GW. Countries like Germany, Italy, China, USA, & Japan all have installed capacity of greater than 5GW with Germany leading the way at 33GW largely due to a friendly subsidy & regulatory environment. Even oil producing Saudi Arabia has jumped onto the solar energy bandwagon by announcing plans to produce 41GW of solar energy by 2032. India recently joined the club of countries who have installed solar capacities of at least 1GW by more than doubling its installed solar capacity during 2012, largely due to the Jawaharlal Nehru National Solar Mission a government subsidy program which aims to have installed capacity of 22GW by 2022. Much of this growth in installed capacity has been achieved through the development of utility scale solar farms some with hundreds of MW of capacity. These sorts of initiatives can be a successful way to develop solar capacity in high insolation areas like the states of Gujarat & Rajasthan in India as well as the Mojave desert of California in the USA and with the help of various subsidies can allow for independent power producers to profitably supply clean renewable energy to the grid. Furthermore, by developing a local solar energy industry, countries have the ability to create local jobs in high tech manufacturing in order to supply the needed parts and equipment. As costs continue to decline, these solar farms with their zero cost fuel source (sunlight) will eventually reach grid parity and will become cost competitive without subsidy with other forms of utility scale energy especially as policy makers begin to phase out some of the $500 billion in subsidies to production & consumption of fossil fuels around the world.

Due to the ability to decentralize solar energy production, there are numerous alternative models to the utility scale solar farms for distribution of solar energy, particularly for off-grid communities. Innovative businesses in the USA, Sub-Saharan Africa and India have already discovered how to provide the power of solar energy to consumers in a more cost effective way than current alternatives. These solutions include a variety of approaches based on the context of the specific customer segment. In the USA companies like Sun Power provide residential solar panel installations that allow consumers to save on their monthly energy bills, cash in on tax credits & rebates, and increase the value of their homes. In addition solar installations can allow for payback periods as low as 5 years and savings of up to $30,000 over the 25 year life of a system. Companies like Solar City are using a different approach by leasing solar energy. This approach allows customers to power their homes with clean solar energy without the upfront costs of solar panel purchase and installation. The Solar City model still provides the ability to sell additional capacity back to the grid creating additional savings on monthly electricity bills. A company called Simpa Networks is using a similar pay as you go concept through its metering & payment system in off-grid communities in India in order to provide for the radical affordability of this technology in rural areas . After installation of a household solar energy system customers are able to prepay for solar energy through their mobile phone in small user-defined increments. In this way the payment mechanism seeks to replace current purchasing habits of more polluting & dangerous kerosene or diesel. Furthermore each payment goes towards the overall purchase of the system allowing for customers to eventually unlock the system providing free energy for the remaining life of the unit. Another company called d.light designs is selling solar powered lamps across the developing world providing a higher quality & cleaner source of light to millions of people worldwide without access to reliable electricity. In these cases, beyond just access to electricity, solar energy is providing the economic benefits of connectivity and increased productivity for these rural households.

The applications of decentralized solar energy across the developing world have enormous potential. In India the costs of extending the existing grid to rural & mountainous areas are prohibitively high in many places and the current methods of using kerosene and diesel for light & power are more polluting, have negative health effects, and can be more costly when compared with solar power despite widespread government subsidies of fuel for the poor. There is a huge opportunity to provide clean, decentralized electricity to these communities through micro-grids & household systems and solar energy could be a great way to produce the electricity to power these systems. On a recent visit to Hosur, an industrial hub outside of Bangalore, I witnessed a community of small manufacturing businesses running their manufacturing processes on diesel generators as the electricity supply was intermittent at best. For these businesses, diesel costs can make up a significant portion of their operational expenses and the need for these systems causes the local environment to be polluted with the fumes, noise & smell of diesel generators. There are thousands of small industrial sites like this throughout India and countless more around the world that could all benefit from small scale solutions providing more cost effective & cleaner solar energy.

Over the coming decades installed capacity and usage of solar energy will continue to increase worldwide as costs continue to decline with improvements to technology related to capture, conversion, storage & transmission and as policy & regulatory environments are adapted to help facilitate access to these beneficial technologies. As new models & applications are created the distribution of solar energy can become widespread throughout the developing world leading the charge of electrifying the 1.3 billion people worldwide without reliable access to electricity. Furthermore as solar energy helps to facilitate decentralized & local energy production, countries & individuals will become more energy independent reducing the risk of international conflict over finite energy resources that are vital to economic growth. Innovative designs incorporating solar energy could revolutionize everything from transportation to clean water systems. As the dawn of the solar age fades, the future of solar energy looks bright.

Solar Sunday

This past Sunday I had the privilege to meet fellow solar energy enthusiasts Catlin Powers, Co-Founder of One Earth Designs, and Colonel Varma, a retired Indian Army veteran for Sunday brunch. This was no ordinary meal however. Everything we ate was cooked out in the open sun on One Earth Designs’ Solar Cook Stove the SolSource.

Catlin & Colonel Varma getting ready for the solar meal

Solar cook stoves have been around for a number of years now and are aiming to solve a critical issue both in environmental & human health. There are around 3 billion people worldwide that rely on pollutant solid fuel sources such as coal, wood or cow dung and use these fuel sources in an open fire within their homes for both cooking and heating needs. Needless to say daily inhalation of the smoke emitted by these indoor fires is a huge health concern, ranked by the WHO as one of the worst health risks facing the poor, and needlessly killing almost 2 million people a year, more than malaria and almost as many as AIDS worldwide. Collection of firewood is also huge time & energy burden in many low income areas requiring the need to carry the close to 50lbs of fuel wood as much as 10km one way each week. Furthermore the felling of trees for fuel wood results in ongoing deforestation and as forest areas are depleted, families must travel even longer distances to collect fuel resources.

Father & Daughter carrying fuel wood through the hills of Western Guatemala

Solar cook stoves provide a healthy alternative to the polluting fuel sources currently used for cooking in addition to saving families time & energy and helping to protect the world’s remaining forest areas. Furthermore the solar energy used to power the stove is free and renewable so the cook stove becomes an economical alternative to weekly purchases of more expensive coal in many rural areas.

There is certainly an obvious need for these products, but markets sometimes function in strange ways and need doesn’t always translate into demand. One of the most difficult things to do in the world is to change existing behaviors. Stories abound of markets being flooded with cheap and even free solar cook stoves only for the stoves to be left unused and even found being used as door stops. Just as in any start-up  when designing a solar cook stove it is important to design a product to suit the particular needs and desires of your target customers. Simply designing a cook stove that appeals to donor or investor groups without validating the product in your target market will not necessarily produce a quality product that is sought after by your customer base.

SolSource in action

Catlin Powers, Co-Founder of One Earth Designs, understood this from the beginning. After growing up in 4 different continents, living a bit of a nomadic life herself, Catlin went on to attend Wellesley College where she left after her sophomore year in order to go live and study for 2 years with the nomads on the Himalayan Plateau of western China. She originally went to study the effects that the pollution emitted from the new coal-fired power plants was having on the Himalayan climate, but after spending time living with the nomadic families she quickly realized that the more pressing issue with pollution was the one going on within the homes of these families. This understanding led her on a journey through a PhD at Harvard University on Environmental Health to the founding of One Earth Designs and the design of the SolSource solar cook stove with the specific needs and desires of the inhabitants of western china in mind. After numerous test models and validation trials with various customers they came to the current design which includes various user friendly attributes such as a dial to control temperature, a surface that is scratch resistant, not hot to the touch, and a system durable enough to withstand the high wind speeds of the Himalayan Plateau, but lightweight and compact enough to fit into a trekking backpack which can be carried around if needed.  The product has won numerous awards including the 2009 MIT IDEAS Global Challenge & 2011 Unreasonable Institute fellowship.

Venture capitalists often use the idea of “betting on the jockey not the horse” when choosing potential investments. This is basically the idea of investing in a person or a team rather than a specific product or service idea as in the world of start-ups  business models & concepts can change quite fast. Catlin Powers is the kind of intelligent, passionate, and ambitious individual willing to travel around the world spreading her message that is a great example of a “jockey” that I would be willing to bet my money on. In a world full of solar cook stove alternatives this is an essential aspect of a successful start-up social enterprise.