Newsletter 14/05/2019

Video: A Few Insights with Nicholas Leong

Wartsila

Nicolas Leong

Regional Director, Southeast Asia

Wartsila

Join Nicolas Leong, Regional Director, Southeast Asia, at Wartsila, as he shares some insights into the LPG industry in Southeast Asia with regards to the potential of power generation from LPG in the region.

Envirofit: Revolutionizing Cooking in Emerging Nations Across the World

Envirofit

Envirofit

Cooking with a clean fire is something that in many parts of the world is a luxury. The up-front costs of access to clean fuels is unaffordable to many who live in these more rural parts of the world. This problem results in the loss of our forests, and the even greater loss of precious human life that comes from using firewood instead of LPG.

Envirofit has been working on solving this problem in a very interesting way, tackling the issue head-on, by allowing users to pay for fuel only when they need it. There has never been a time in our history where such technology would have been able to work – it’s the first time ever that even the poverty stricken are dialed in, and connected to the world wide web.

The time for Smart Gas is now!

1. How does Envirofit’s Smart Gas system work?
In 2018, Envirofit developed and launched SmartGas, a new technology and service that makes LPG accessible, affordable, and safe. SmartGas enables families to Pay-As-You-CookTM for gas using mobile money. Through Envirofit’s business model, marketing agents enroll customers in the SmartGas service. Envirofit service technicians then safely install a gas cylinder with a SmartMeter in their home. During installation, customers are educated on LPG safety and how to use and top-up their SmartMeter. Customers are then able to use mobile money to pay for gas in daily amounts. The SmartMeter dispenses fuel and turns off when credit is spent. When the cylinder is low, Envirofit is notified and a customer care agent schedules the next cylinder delivery. Envirofit’s business model will grow a base of subscribing customers who receive monthly home deliveries from trusted service technicians. The Pay-As-You-CookTM business model aims to combine pay-as-you-go financing with a recurring last-mile delivery service. This service relationship will change the way families access and pay for energy and other goods and services without having to leave their home or save large sums of money.

2. Why have pay-as-you-go systems for LPG not been developed prior to this? (What has changed?)
The growing adoption of mobile phone technology and mobile money has set the stage for the development of pay-as-you-cookTM financing solutions. The number of mobile money accounts increased 25% between 2016 and 2017 with over 690 million accounts worldwide. For new technology to be adopted it needs to be easy to use and convenient for customers and mobile money allows people to pay an amount they can afford from the comfort of their own home. Traditionally, in the clean cookstove sector LPG was viewed as an aspirational fuel- meaning the entry level and price point made it an unrealistic solution for families in emerging markets. The SmartGas technology however, helps to overcome these barriers making LPG as affordable as charcoal. Envirofit is a leader in th clan cookstoves industry in bringing clean energy products from design to scale. After growing its strategy to include LPG technologies Envirofit spent two years researching and developing SmartGas before launching commercially in 2018.

3. What are the biggest challenges in getting users in emerging nations to adopt Smart Gas? And What are some of the things Envirofit plans to do, to overcome these challenges?
The commercial launch of SmartGas has seen unprecedented demand as compared to Envirofit years of selling nearly 2M improved biomass cookstoves. However, Envirofit designed its program to address challenges seen in LPG adoption. Getting started with LPG, customers have to purchase a stove. Costing between $30-60, LPG cookers are still beyond the affordability of families in emerging markets. The SmartGas not only provides financing for gas, but also gas cookers, enabling a family to start cooking with gas immediately. SmartGas customers have to option of using their own cooker or purchase one with or without financing from Envirofit, the later representing 60% of the SmartGas customer base.

The second barrier is the perception that cooking with gas is dangerous. Envirofit based its safety standards, training, and guidelines for both consumers and employees on international standard guidelines from the US, UK, and Australia. In addition, every time a technician enters visits a home they perform a 10-point safety check on the system to ensure no issues are present with the SmartGas system. During installations in Kenya, Envirofit’s technicians have discovered many new customers previously operated their LPG stove in an unsafe manner (old hoses and leaky valves etc.). In transitioning customers to SmartGas, Envirofit employees have already helped to prevent many accidents from occurring.

4. Have Government bodies in emerging nations been receptive of Smart Gas technology? What is needed to garner more support from them?

Envirofit has begun conversations with a few governmental agencies including the Kenyan and Indian governments. The key to working within the government framework is unlocking funding to adapt the technology and begin pilot programs specific to the target market of government programs. Successfully delivering SmartGas isn’t as simple as buying and distributing a product but developing a service that delivers to customer base. This requires a greater investment than a tender process but the establishment of a long term on-going program. It also requires the recognition that energy access is more complicated than a one-time product-based model but requires the investment in an ongoing service delivery model.

5. What plans does Envirofit have for the future?
Envirofit aims to expand operations beyond Nairobi, across Kenya and East Africa and begin operations in West Africa, Asia, and Latin America over the next five years. Envirofit designed the SmartGas software platform to be able to integrate partner owned last mile distribution channels, as well as sub-license certain software programs. Envirofit’s SmartMeter can be configured to virtually any type of LPG cylinder valve and the SmartMeter software can be adapted to any language, currency, or culture, providing a high level of flexibility. Envirofit’s business model is designed to give partners different levels of control of the value chain from LPG supply and logistics management to distribution. As a result, existing local LPG distributors who have established networks can use SmartGas technology to expand their customer base and manage the last mile distribution.

PAY AS YOU GAS™ world's first Gas station opening in Cape Town, South Africa

Paygas

PayGas

The world’s first Pay as you Gas™ station will be opened earlier April, in the heart of Delft township in the Western Cape and will change the habits of people buying gas. This Cape Town start-up is breaking the historical barrier related to the minimum quantity of gas a customer is forced to buy when swapping a full cylinder.

PayGas provides gas to low income households and the way it works is the patented technology adjusts the quantity of gas delivered, to the amount that customers can afford. To ease people’s lives, Pay as you Gas™ will launch in the Mother City and then in time deploy stations in townships throughout South Africa. A global reach is also in the pipeline.

PayGas’ technology breaks up LPG inside standard 5kg cylinders. This revolutionary method allows customers who cannot afford a full cylinder to use an affordable, safe and clean energy system for cooking their daily meals. This technology replaces the traditional method of exchanging empty cylinders for new ones, which dealers have to maintain through costly supply chains and storage.

With PayGas, customers can easily walk to the closest Pay as you Gas™ station in their neighborhood and use their cell phones to buy as much as they can afford.

Pay as you Gas™ has its own cashless payment solution. Using USSD technology, it can approach clients who have no access to expensive internet data or only cheaper 3G phones. This method will help avoid the risk of customers being robbed in the street, an unfortunate situation that exists in townships today when people are queuing for gas.

With the electricity prices expected to rise in South Africa, PayGas will help municipalities reduce more than 30% of their electricity bills to low income areas. It will also help reduce the number of casualties caused by shack fires that are ignited by paraffin and candles.

PayGas new gas distributing processes are above all the highest international safety and security standards for the station, the site, operators and customers. Local authorities support and participate to PayGas initiative that creates jobs inside townships, makes positive impacts on people’s lives and the environment.

The launch of PayGas in Delft will eventually help 14 million people living in townships in South Africa and then globally for the benefit of 4,6 billion low income customers.

PayGas is searching for investors to partner up with who would be able to speed up their deployment throughout South Africa. They are looking to raise $1.5 million in July and appointing their advisory board with investors who share their vision in an LPG for all world.

Interview with Michael Kelly, 
Deputy Managing Director and Director of Market Development, WLPGA

Michael Kelly

Michael Kelly

Deputy Managing Director and Director of Market Development

WLPGA

The Cooking For Life Program

 

How did Cooking For Life, get started?

Cooking For life was launched in 2012 in Bali, during the WLPGA Forum at a time when there was an increasing focus on clean cooking access in developing countries,. Numerous initiatives were being created by development agencies at the time and as the LPG industry had a strong role to play in this area – LPG needed a platform where it could make a real impact.

Have there been local governments and private company involvement in the Cooking For Life Program?

What are some of the governments and companies that have been involved so far?
Yes, there has been quite a bit of involvement from government and private companies as Cooking For Life is primarily a communications programme and working with these stakeholders is essential for the programs success.

Some major highlights have been the work that was done in India and Indonesia where the governments there carried out some very aggressive switching programmes to move people away from biomass towards LPG. In India, the switching program was driven by Prime Minister Modhi himself and this led to the involvement of many Government Linked Companies or State Owned Companies by simple directive.

As local governments are involved in developing policy frameworks, their support is key and this is where WLPGA helps by providing guidance on how best to establish these policy frameworks and also advise on best industry practices.

There have also been several other successful projects in Kenya, South Africa, Peru and Guatemala where local governments and private companies were very supportive of the initiative.

How successful has it been?x What have been some of the most significant achievements that came out of it?

Cooking for Life aims to facilitate the transition of one billion people who are cooking with biomass to cook with LPG by 2030. The reason that the year 2030 was chosen is because this is the same year that the Sustainable Development Goals set out by the UN are set to be achieved.

With this end goal in mind, it is clear that the program is well on its way to success surpassing expectations in high population countries such as India, Indonesia and Bangladesh and with huge added growth coming from countries like Nigeria.



What does the workshop that you lead look like? What are the key points that you make?

Is safety at the core of the discussion?

Safety practices are always a core of the discussion when it comes to anything about LPG. The main objective of the workshop is to identify obstacles and challenges in the market and issues such as lack of regulatory oversight, supply bottlenecks and poor adherence of standards, and figure out how the industry can move past these issues or solve them altogether.

The workshop gives an overview of the LPG industry, an overview of the global supply and demand dynamics and a section on good practices with fictional case studies and what can be done in each of these different scenarios to improve the industry.



Is there anything else that you would like to mention?

I would like to say that we are very happy to work with LPG Summit and that we look forward to participating in the 6th Africa LPG Summit 2019 in Tanzania in July later this year and helping the LPG industry grow over the

LPG Summit’s Events In 2019

6th Africa LPG Summit

3 – 4 July, Mlimani City Conference Center, Dar Es Salaam, Tanzania

Nigeria LPG Summit 2019

27 – 28 November, Lagos, Nigeria