Namene harnesses clean technology to transform lives and livelihoods. They provide highly reliable, everyday devices that are affordable to all, including low-income households. Namene meets off-grid families’ daily utility needs while eliminating sources of combustion. Buying low-cost Namene products enables customers to free up income to buy other clean devices when they need and can afford them.
What markets are you working in?
We started working in Zambia right before the pandemic, which slowed us down initially, but we have now been able to distribute over 500 000 pico solar lamps in the last two years as part of our carbon projects. The use of carbon finance and the certification of our projects has enabled us in the last 12 months to distribute over half a million lamps in the range of 0 to 1.5w across Zambia, Namibia and Zimbabwe, gaining a significant market share in this category in all three countries. We currently have a pilot distribution project in Lesotho and we’re planning to go into other Sub-Saharan African markets as well.
Our Namene light has improved our life so much. I’ve seen improvements in my brother’s education, and he has just graduated.
Can you share a bit more about the work you’re doing with carbon credits?
For me, there are 3 important things to say regarding carbon credits and how we use them to discount our products
- It’s important for carbon credits to be highly credible and follow specific integrity principles, guaranteed robust third-party certification. It’s a complex but genuine pathway to attract climate finance to the sector, which avoids potential negative reputational consequences for credit buyers. We are working with the Gold Standard for the Sustainable Goals, the most demanding certification on the Voluntary Carbon Market. There are additional initiatives created to maximise the integrity of carbon credits, like the Integrity Council for the Voluntary Carbon Market (IC-VCM). The IC-VCM has recently launched the Core Carbon Principles (CCPs), a global benchmark for high-integrity carbon credits that set rigorous thresholds on disclosure and sustainable development.
- Our guiding principle is to leave no one behind. Our products are entry-level, high quality and highly affordable clean energy products targeted to families at the base of the socio-economic pyramid. One of the main barriers standing in the way of accessing these products to improve their daily life is affordability. We are able to offer our solar lamps to customers at a discounted price using carbon finance, hence allowing customers to buy on a cash basis in one instalment. The carbon emissions resulting from displacing fossil fuels for lighting are monetised as carbon credits. In order to address the high costs related to last-mile distribution, we aggregate demand through collaborations with schools and community centres to raise awareness, build trust and create word of mouth. This enables us to build scale and create a sustainable business.
- In addition to solar lights benefiting from carbon finance, we see a potential for carbon projects funding access to clean water through collective solar water pumps or filters in houses, to save people having to boil water (using firewood or other fuels). This could also apply to solar systems replacing diesel gensets in countries like Nigeria.
How is carbon finance benefitting the customer?
We use the income we generate through carbon finance to subsidise the product for the final user. The customer stops spending money on kerosene and candles, which we have calculated can save each family between 35 and 100 US dollars annually. This might not seem like a lot. However, for low-income families in the countries where we work, this is a substantial amount. Since we need to monitor the project over at least 5 years, we also offer after-sales services and warranties to ensure people are using their lights and any repairs and replacements are provided to end users.
We can tell which children did their homework the night before: those who cough or have red eyes from the kerosene fumes.
Can you describe a little bit the process for getting carbon credits?
We see the development of carbon projects as a marathon, not a sprint. We had the idea of developing a carbon project back in 2018 and we started with the pilot in 2019. On average, it takes about 12 to 18 months from project inception to certification. Our first project has already issued carbon credits, allowing us to monetise the emission reductions while other projects keep distributing solar lamps.
The first steps to follow are to certify the design of the project, select the relevant approved carbon methodology, conduct stakeholder consultations and establish robust monitoring processes. Then you can start generating credits as the solar products are deployed and displacing fossil fuels.
To give an idea of the magnitude of our projects, 11 solar lamps over 1 year generate 1 carbon credit. We are able to monitor what we are achieving through sampling and surveying. These results are audited independently by an accredited third party, and then the Gold Standard issues the carbon credits. These credits are listed in the Gold Standard project registry so that they can be sold and retired (i.e. used) by the final users to compensate their emissions. As you distribute the equipment, more credits are generated over time.
It’s a long process of about 3 years of work before receiving any income and, of course, there is the risk of not fulfilling the criteria. Additionally, the variations in prices are an unknown variable since the credits are sold in the voluntary private market. The value is higher the harder the project is to implement and the more co-benefits associated with the project.
Given the complexity and timeline you have described, would you recommend carbon credits as a source of financing for small companies?
One thing to consider is that current carbon market prices are insufficient for many off-grid solar projects. Many energy-poor households use kerosene or candles, but many others are using LED lights with batteries. There is no carbon reduction in these cases, although there are millions of batteries being thrown yearly as electronic waste and the off-grid solar sector can contribute to solving this problem. Besides, the monthly cost of the batteries would be enough to buy a solar lamp.
In Nigeria, for example, where the use of diesel generators are widespread, there is a higher margin to work with carbon credits. Also, within the clean cooking sector, monitoring and implementation can be challenging but, because traditional stoves generate a substantial amount of carbon emissions, clean ones can be heavily subsidised and distributed almost for free and still offer a return to investors and distributors.
I think for smaller companies to go 3 years without carbon revenues is very difficult. In some cases, there are facilities or investors that could provide some upfront financing in exchange of a preferential price for carbon credits in the future. I would recommend first determining the right scale to ensure the transaction costs and expected returns are covered using carbon finance. Alternatively, for smaller players they could also become part of an existing carbon program, for instance, acting as a local distribution partner or monitoring and after-sales contractor. This way, the risk and investment is borne by a third party but smaller solar market players can take part and expand their activities through carbon projects. One example is members of the Global Distributors Collective that can benefit from these type of collaborations.
When the solar lights are on at night, it feels like a town, not a village. Now we no longer need to spend on expensive candles and kerosene.
How do you reconcile serving the bottom of the pyramid and business results?
We are a for-profit company so we are capable of serving the poorest people in the world and improving their lives while creating a sustainable business thanks to scale.
What does the future look like for your company?
We are thinking of future pico-entry-level products to continue reaching the lowest-earning households and improving their lives through phone chargers, radios or batteries to power these products.
We are an integrated company: we design and manufacture our products, we have our own distribution network as well as external distributors, and we use a robust monitoring system. Our retail agents use an app to capture data from the consumer which we use for reporting and for producing the carbon credits.
For the future, we aim to reach more markets, higher penetration and more activity leveraging the carbon markets for growth while also expanding through commercial sales in these markets.
You mentioned collaborations and scale as key components of your business model. What role does the public sector play?
Collaborations are essential to scale and leverage the knowledge and capacities of partners on the ground, and to ensure alignment with the local market and authorities. For instance, before going into a specific market, we inform and involve the local or regional governments about our planned activities and get approvals if needed. Sometimes, we need a licence to operate per district, or are required to hire local staff for sales and customer service. We adapt to local needs wherever we operate.
In Namibia, for example, we had verbal approval from local authorities to work in schools but we didn’t have any official letter from the government in some regions, which made it harder and required us to reformulate our distribution plans.
Having the public sector’s involvement is helpful in creating the right conditions to raise awareness and aggregate demand, which is fundamental to achieving scale. In some markets we have collaborations with radio stations, we distribute samples, we have local teachers or village chiefs engaged, who help explain how products are used and influence their community. These are mechanisms to lower barriers to entry.
How long have you been a member of GOGLA? How do you think GOGLA has supported you and the sector?
We have been GOGLA members for many years. We have benefited as members by participating in events such as industry conferences, by receiving newsletters that keep us abreast of recent industry developments and announcements, as well as by reading the bi-annual reports to follow the growth and evolution of the market. We aim to be more actively involved, particularly on the agenda of leaving no one behind, and working collectively as an industry in identifying opportunities to bring access to clean energy to all.
What would you like to see happen in the sector?
We definitely would like to see it grow significantly in the coming years, particularly as the energy access gap remains quite high in Sub-Saharan Africa, with recent reports highlighting that the world is behind in making progress towards SDG7: Sustainable Energy for All. Also, an increase in funding to accelerate capacity building, technical support and a predictable and consistent policy framework would clearly help us all in this sector to provide everyone with clean energy solutions.
Published: 19 September 2023