What does ENGIE Rassembleurs d’Energies do, and how has it been involved in the clean cooking sector?
ENGIE Rassembleurs d’Energies (RDE) is ENGIE’s corporate impact venture fund, which promotes access to sustainable and relevant energy solutions for poor and remote populations through direct investment in local social enterprises. Given that much of the world population’s energy use is related to thermal energy for cooking, RDE identified the scale-up of clean and safe cooking solutions as a priority back in 2015, and considers it one of its key development objectives. Starting with a first investment in Sistema Biobolsa in 2015, and most recently an investment in Envirofit at the end of 2018, RDE has built a diversified portfolio aimed at tackling the global issue of sustainable models for clean and efficient cooking solutions. RDE investees are active in the production and distribution of cooking solutions on four continents and in over 15 different countries, providing improved solutions across various technologies but with a strong focus on micro-biogas technology.
What are the most important lessons that ENGIE RDE has learned about investing in, and working with, clean cooking businesses?
Despite the huge requirements to tackle this issue globally, and the significant number of actors interested in, and in some way addressing, this issue – it took RDE a while to identify and select the investees it deemed most appropriate for its investment strategy. Unfortunately, the way carbon finance incentivized market participants ultimately had an adverse effect on the entire sector because it drove enterprises away from profitable business models capable of delivering high-impact solutions that people want, in ways they can afford, without becoming reliant on significant subsidies. We believe it is likely that a mix of fuels and technologies will co-exist as the sector continues to scale. Despite the obvious benefits of cleaner solutions on health and on savings for the users, cooking habits certainly slow down the expansion of such solutions. It requires long-term and efficient marketing efforts from companies to promote cleaner solutions, and for those solutions to truly meet consumers' daily wants and needs, rather than focusing on their health-protective benefits. We also see that recent regulatory measures (such as charcoal taxation and bans) in various markets have the ability to accelerate change and shift cooking habits in a positive way.
What are some of the promising developments that ENGIE RDE sees in the clean cooking sector?
Just as has been done with off-grid electrification, the development of new credit and asset financing solutions could accelerate the deployment of clean cooking solutions – particularly those that can generate significant health impacts but are completely out-of-reach on a cash basis, even amongst those who pay for, rather than collect, increasingly expensive fuel. We believe that pay-as-you-go (PAYG) solutions could be an appropriate catalyst to unleash the growth of clean cooking, as well as electrification. A few market actors have carried out promising pilots with PAYG LPG, including Envirofit, Kopagas, and Paygo Energy, or have integrated PAYG models with clean-burning biomass gasifiers, as in the case of African Clean Energy. We have little doubt that the deployment of such approaches will impact the growth of clean cooking solutions, much as they impacted the growth of solar home systems. Not only could such approaches provide bankable credit solutions for customers, but they could also provide more finely-tuned impact measurement that could attract additional grant funding and outcome-based aid. We are seeing more and more historically ‘solar, home system companies’ focusing on the clean cooking sector – a very positive crossover we believe will drive own-growth in a more sustainable manner, as well as boost the development and impact of a sector which has, for years, struggled to move past relatively small-scale, insufficiently high-impact approaches.