E+Co and Philip LaRocco, Executive Director
E+Co?s mission and sole focus is to empower local small and medium enterprises that supply clean, modern and affordable energy to households, businesses and communities in developing countries. It provides a combination of enterprise development services and investment to local enterprises; resulting in access to energy for those using traditional, expensive, unhealthy and unreliable energy as well as the elimination of energy waste by offsetting fossil fuel use.
For more than a decade, E+Co has targeted its activities to those that innovate in the energy-environment-development finance value chain. The purpose is to stimulate investment in and services to local energy entrepreneurs -- those men and women that E+Co believes are the key actors in combating energy waste and energy poverty. E+Co's approach to this mission and purpose is to connect the dots among the variety of actors and factors needed to increase modern energy access. The approach, called the "enterprise centered business model" is market-based, flexible and built on more than a decade of experience. E+Co's role as a public purpose investment company blends best practices philanthropic, venture capital, public and private sectors in a sector long dominated by intransient stakeholders. In the energy sector, the interventions have been dominated by large, fossil fuel based, utility centered and multi-lateral/government financed power plants. E+Co's model fosters an emphasis on decentralized, renewable energy and energy efficiency, private sector led businesses. It is the commencement of a new energy finance paradigm.
Individuals such as the 3.4 million people in developing countries already being served by E+Co and its enterprises will benefit by having improved access to clean and modern energy. This access reduces the incidence of indoor air pollution and the resulting respiratory illnesses. Additionally, women and children will be empowered by eliminating the need to collect firewood and water, freeing them to pursue more income producing activities such as going to school and selling vegetables in the market. Society will benefit E+Co's activities: increasing the access to clean energy by supporting small enterprises will decrease environmental degradation. Specifically, clean energy enterprises help replace fossil fuels, which contribute to carbon dioxide emissions and deforestation. Small business can have a large impact on long term clean energy provision. E+Co's work provides society with a viable solution to fossil fuel dependency.E+Co's philosophy is based on the premise that energy is essential to development. Economic development occurs when women are able to participate in the market. By freeing them time consuming activities such as collecting firewood and water, access to clean energy enables women in developing countries to engage in more productive activities. The empirical evidence clearly demonstrates that small and medium sized enterprises have a large impact on the economy. Although difficult to determine with precision, rough estimates suggest that businesses with 10-200 employees account for 90 percent of firms and 50-60 percent of employment worldwide. The Small Business Association reports that in the U.S. 60-80 percent of new jobs annually have been created by small enterprises. Recent research, including a report by the United Nations Development Organization, demonstrates that small and medium enterprises (1) are labor intensive, thereby providing more job opportunities to unskilled labor; (2) are necessary for the transition agriculture-dependant nations to industrial nations; (3) usually have a vested interest in the community; (4) pay more taxes as they expand and (5) contribute to overall gross domestic product. E+Co has invested in more than 140 enterprises and intends to invest in more than 300 enterprises over the next 6 years. The modern energy enterprises that E+Co supports utilize environmentally superior forms of energy production and use than that currently used in the markets. E+Co's intent is to bring households, businesses and communities "up the modern energy ladder", a position of using firewood or charcoal, to that of efficient stoves or alternative cooking fuels; kerosene and batteries to solar home systems; diesel electricity generation to waste to energy electricity generation. Each of these steps results in environmental improvements: reduced pressure of deforestation through fuel reduction or switching; decreased GHG emissions through offsetting fossil fuel usage. Through June 2006, E+Co investee companies have offset 2.2 million tons of carbon, with a lifetime offset projection of 13.2 million tons. Fuel substitution and efficient stoves have offset 205,000 thousand tons of firewood usage; 259,000 barrels of fuel oil have been offset.
The proliferation of those understanding the blending of public and private models of finance and development and its application to small and medium energy enterprises can be traced back to E+Co's early days. E+Co's thirteen year track record of investing in clean energy enterprises and the resulting financial, social and environmental impacts of these enterprises has engaged partnerships on many levels and stimulated new players to enter the space.The enterprise centered model was the basis upon which the United Nations Foundation and UNEP founded its award winning Africa Rural Energy Enterprise Development Program (AREED), a winner of the 2002 Energy Globe Award. E+Co has engaged many organizations that are committed to sustainable development (e.g. The Body Shop), capital market development (e.g. The Mulitlateral Investment Fund), poverty alleviation (e.g. the Dutch Government), technology proliferation (e.g. The Lemelson Foundation), small and medium enterprise development (e.g. The International Finance Corporation) and clean energy in developing countries (e.g. The German Government). E+Co's partners extend to those operating on the ground who work with E+Co in identifying and shaping viable enterprise opportunities and providing context on the policy and regulatory frameworks within which enterprises must operate. NGOs such as the BUN-CA (Biomass Users Network of Central America), ENDA-Senegal and the Mali Folkcenter are organizations that E+Co has introduced to enterprise development techniques and with which it partners in developing sustainable vehicles of clean energy access and increasing the flow of capital to this space. The movement "projects"to "businesses," "grants" to "investments," has proven to be a key factor to creating and strengthening the clean energy supply chain in developing countries.
E+Co strives to mainstream clean energy provision and use by influencing a shift in the current energy paradigm.Solutions to clean energy provision are held hostage by the vested interests that delay the major shift needed across multiple dimensions of the Old Energy Finance Paradigm to a New Energy Finance Paradigm.The old energy paradigm relies on central-station energy generation delivered via wires. It is often government funded and involves large scale project finance. Usually, it will be technology driven and offer 20% returns on investments.The New Energy Finance paradigm involves smaller, decentralized energy systems that include clean energy enterprises. It is entrepreneur and customer driven and relies on bottom up and private enterprise financing. Patient capital and shared credit risks lead to long term capacity building and market development. Particularly challenging aspects of making this shift are evident in the ?big? programs pushed via governments, where sadly, a lot of money has been wasted on unaffordable electricity grid extensions and capital city-driven, technology focused ?projects? rather than sustainable, market-driven businesses. Top down planning and implementation has, and still does, dominate rather than bottom-up implementation. The challenge undertaken by E+Co was to create a means by which these clean energy businesses could be supported, financed and expanded on a scale sufficient to meet the massive energy needs of households, businesses and communities in Africa, Asia and Latin America in a manner that is financially, socially and environmentally sustainable, or as E+Co measures it, across the ?Triple Bottom Line.?E+Co creates systematic impact by engaging others to pursue this enterprise-centered model and advocating for the new vs. old paradigm. For a small organization (a global staff of 39 in nine locations ), E+Co is a strategic player in the global dialogues on increased energy access and advocates for the New Energy Finance Paradigm Shift through its participation in many international conferences related to renewable energy finance, small and medium enterprise finance and Triple Bottom Line Reporting. The quantitative data supports the efficacy and wide impact of the E+Co model. Through a maturing Triple Bottom Line reporting system, E+Co can track that 3.4 million people are being served with clean and modern energy by its investee enterprises; 140 clean energy enterprises have been created; 2 million tons of carbon dioxide are offset annually; and over 200,000 tons of firewood has been displaced.
E+Co invests in sustainable enterprises that provide social and environmental benefits to their communities. Unlike projects, which are often structured as having a beginning and an end, E+Co's investments create on-going businesses and financial incentive structures to support long-term human infrastructure, thus allowing sustainable delivery channels of clean energy delivery and its environmental and social benefits. This is sustainability in its truest sense: on-going and financially viable.
E+Co?s thirteen years of stimulating the paradigm shift indicates that the three most important levers for change in increasing modern energy access in developing countries are 1) human capacity 2) money and 3) rule-changing. E+Co?s work addresses each of these levers. For every $1.00 E+Co invests, almost $6.00 of entrepreneur and third party financing is mobilized over time to support increased access to clean energy. For every $34.00 invested by E+Co, one person receives newly delivered modern energy. With that same $34.00 investment, approximately 34 tons of carbon dioxide are offset by E+Co's clean energy enterprises. Therefore, based on past experience, every $34.00 of funding placed in E+Co's portfolio will (1) be repaid after all costs (2) mobilize $191.00 of "other people's money" (3) deliver modern energy to a developing country citizen.Since 1998, E+Co has invested $12.7 million and mobilized over $140 million of financing for clean energy enterprises.