Author: Rahul Shah, MECS Asia Project Manager
Introduction
The Mobile Enabled Community Services (MECS) Programme conducted its second annual Asia Working Group, in Jakarta in late June. Over 30 industry stakeholders from across Asia attended the event engaging in a lively conversation around the key opportunities, challenges and trends facing energy and water access for underserved populations in the region.
Setting the Stage
The Welcome Address was given by Mr. Harry Sasongko, currently on the Board of PowerStorm Capital and previously CEO of Indosat. The MECS team presented key trends from the grant application pipeline which you can also read about in the Annual Report.
MECS grantee Emergence BioEnergy (EBI) shared insights on developing a partnership with Mobile Network Operators (MNOs). MNOs are typically focussed on the challenges in their core businesses, generally do not have bandwidth to focus on the energy or water business and expect quicker paybacks than a typical MECS Service can offer. Therefore, ESCOs have to invest time in educating and building trust. On the other hand, MNOs offer MECS organizations a path to scale and investing time in developing a partnership can be a very good investment.
Service Design – Water and Sanitation
The Service Design panel comprised representatives of NextDrop (a MECS grantee) and the World Bank. NextDrop is a mobile-enable water service whereas the World Bank presented a mobile service for sanitation. Both agreed that a hurdle that complicates the design of water and sanitation services was that the entity paying for the new service and the beneficiary are often different. When the user and payer are not the same, the case for the uptake of a service can be difficult to make. More generally, the design of incentives for all stakeholders can be tricky because a new service imposes changes in status quo and potentially plugs leakages in the system.
Digital Currencies
The digital currencies panel was composed of representatives of TNP2K, Coda Payments and Kamworks Solar (a MECS grantee). TNP2K works towards the reduction of national poverty in Indonesia, Coda Payments offers a solution to use airtime as a currency and Kamworks is testing the use of mobile money for collection of rental payments on Solar Home Systems.
There was consensus that it is very difficult for an energy or water services company to set up a closed loop payments ecosystem. Instead, they have to partner with payments solutions providers. In the Indonesian context, the regulatory environment has made it difficult so far for mobile money services to scale but it is changing. However, it will take time for agent networks to spread and mature.
Overall, the payments industry requires scale that is difficult for startups to achieve. For example, in Indonesia, there are 17 e-money services but it is difficult to find a user of any of these services.
“To M2M or not to M2M”
The M2M panel comprised representatives of three exciting startups: TinyPipes, a solar solutions provider in the Philippines; EcoEnergy Finance (a MECS grantee), a distributor of solar products in Pakistan; and NextDrop (a MECS grantee), a technology solutions provider to water utilities in India.
TinyPipes is running a pilot to provide a charging service by becoming a utility with distributed solar panels. M2M communications is core to its model. To make the panel smart, a sensing circuit with M2M communications is mounted in the junction control box of the panel. The entire solution (software + hardware) is open source. EcoEnergy Finance also sees value in M2M communication to monitor and control larger Solar Home Systems. The panellists agreed that there are many benefits of M2M communications and it can enable an organization to scale. However, there are various actors that inhibit the adoption of M2M, notably the upfront cost of the equipment plus the ongoing connectivity cost can be a deterrent.
Financing
The Workshop wrapped up with a representative of the Asian Development Bank sharing the services that the bank offers to startups – connecting them to investor networks and TA so they are ready for investors and investments. For a large organization such as ADB, deal sizes are generally in the region of tens of millions of dollars. Project officers’ incentives are also designed to encourage large deal sizes. The investment in Simpa networks ($2 million) represented the first instance of a small deal for energy access.