Can refugee camps go green?

LONDON — The benefits of replacing polluting and noisy diesel with clean renewable power for refugees and displaced people is widely accepted. The problem is how to pay for it. Solar panels, wind turbines, batteries, and mini-grids are much more expensive to install than traditional diesel generators. The payoff comes over the years in the form of free sunshine and wind — saving humanitarian agencies the complications of importing fuel to areas that are often unstable and hard to reach. Small, portable units also allow people to buy their own energy and pay as they go over mobile phones. “We take on the full financial risk of installing the asset on the field … so we are banking on there being a presence there for a long period of time.” --— Mads Uhlin Hansen, chief executive, Kube Energy But up to now, fossil fuels remain the default in displacement camps. More than 87 million people are currently displaced by conflict, natural disaster, political instability, and other problems, according to a February report by think tank Chatham House and the Moving Energy Initiative, which works on providing clean energy to displaced people. Around 90 percent of those people lack access to electricity and 80 percent rely on solid fuels for cooking, which are harmful to health and the environment. In camps, health clinics, schools, and other institutions often rely on diesel generators, which are costly to run, noisy, and emit greenhouse gases. “The heavy fuel oil and diesel spend goes against the basic tenets of the humanitarian system of ‘do no harm,’” said Rachel Kyte, chief executive of the United Nations secretary-general’s Sustainable Energy for All initiative. “It would be much cheaper to be able to move ... camps and areas where displaced people are moving in onto solar and other forms of renewable energy.” Handling the upfront cost, however, is still a challenge for nonprofit customers and the businesses selling them clean energy. Humanitarian budgets tend to run year-by-year, depending on donor funds and the changing status of settlements that aren’t intended to be permanent. That makes it hard to justify longer-term investments. “There are only short-term considerations being taken for refugee camps, but in reality, they persist for a very long period of time,” said Mads Uhlin Hansen, chief executive at the Norwegian startup Kube Energy, which works in Somalia, South Sudan, Mali, and Kenya. The average length of time that refugees spend in camps has been estimated at between 10 and 26 years. Kube, created by former humanitarian aid workers, combines donor and private financing to install renewable energy plants. The humanitarian agency then commits to a power purchasing agreement that recoups Kube’s cost over six to 10 years. “We take on the full financial risk of installing the asset on the field … so we are banking on there being a presence there for a long period of time,” Hansen said. The biggest constraint is selling into a U.N. system that is used to signing contracts for physical objects rather than electricity services, he added. Energy supply is usually a lower priority for humanitarian aid, behind basic needs such as housing; health care; food and water; education; and hygiene. Yet advocates say that clean and reliable power leads to benefits such as refrigeration for vaccines, lighting for work after dark, and running water. The savings from switching to renewables could be significant, too, the Moving Energy Initiative’s pilot projects have found. The World Food Programme, for example, is expected to save $85,000 a year from a new wind, solar, and diesel hybrid system in Herat, Afghanistan. After spending $530,000 on installation and around $212,000 a year on operations, payback is expected in just over six years, according to the Chatham House report. But despite the arrival of private sector operators such as Kube, donor money remains crucial. The Africa-focused company BBOXX received a £30,000 grant ($39,703) from the Moving Energy Initiative to test the market for solar home systems in Kenya’s Kakuma refugee camp. It quickly sold 75 units — comprised of a solar panel, a battery, and four lights — in four months. Customers pay for the system over three years, followed by a smaller regular fee for BBOXX’s services, including fixing breakdowns. It would be hard to make the business stand without donor support, said Joane Kayibanda, head of operations at BBOXX Kenya. The grant helped market the solar home systems in Kakuma and hire and train staff in the camp, where salaries are higher than outside. “From what we are seeing, there is really no business case. But it’s also a basic need,” Kayibanda said. “So how do you, as a business, try to minimize your cost but also make sure this is a need that is being fulfilled?” To start with, BBOXX is setting up operations closer to Kakuma to minimize logistical costs. The reality is there may never be a pure business case for selling energy to some of the most vulnerable people in the world, Kyte said. What needs to change is the way resources are directed towards this basic need. Sustainable Energy for All is working with the UN Refugee Agency and others to expand renewable supply in displacement areas, with private sector support. “The idea that we have to solve that problem with a business case is, frankly, insane,” Kyte said. “We can use public resources that are allocated for the displaced and refugees more effectively, and those resources will go further. As a displaced community begins to be able to pull itself up, then there is a business case because the community is beginning to thrive.”