Impact Data to Mobilize Investment in Energy Transition

This is the second article in a series on the use of exponential technologies to track and verify environmental and social outputs in inclusive energy transition.

In the introduction to this Energy Series, we discussed how non-financial KPIs such as societal and environmental outputs packaged as impact data, can attract urgently needed mainstream investment capital for energy transition companies.

A company driving energy transition can take advantage of the latest data collecting technological advancement. IoT, environmental sensors, drone functionality and permission-based applications on personal devices are providing a mass of data on environmental, social, and financial outcomes. The data is delivered in real time so both the company and the investor has a current and a holistic view of the performance of the company over time. The data also proves for the first time, the immediate and long term contribution of the company’s efforts to the SDGs and various other metrics and standards.

CASE STUDY: AFRICAN CLEAN ENERGY (ACE)

African Clean Energy (ACE), is a company that produces and distributes solar-biomass hybrid energy systems in developing African countries to allow for clean cooking to happen in rural households, while using mobile technology attached to the cooking device to track and provide both microfinancing and non-financial data.

ACE is already part of the results-based financing programmes that are out there. ‘It’s just happening in a fairly blunt way,’ says ACE co-founder Ruben Walker. ‘I’d like to get it more sophisticated, so that you can, first, get a higher incentive, but also deliver more complex data, so actually prove that we didn’t just sell it, it’s actually being used.’

The ACE One Energy System is a combination smart solar-biomass cooking system and a smartphone preloaded with the ACE app, a rich source of usage and user financial data as the system is sold by ACE on a credit scheme called ‘Pay-as-you-Save’.

THE PROBLEM

The problems traditional cooking causes are so devastating that the US government announced in April 2021 that it is resuming and strengthening its commitment to the United Nations’ Clean Cooking Alliance: “Providing clean energy to households is critical to achieving global climate and sustainable development goals,” said Helena Molin Valdés, Head of the Climate and Clean Air Coalition Secretariat. “Smoke from fireplaces, cook stoves, and lighting is responsible for more than half of human-made black carbon emissions and millions of premature deaths from household air pollution. The Climate and Clean Air Coalition partners welcome the US government’s re-engagement in the issue and looks forward to cooperating to put in place solutions that improve lives and protect the planet.”

THE SOLUTION: QUANTIFY, MONETIZE, TOKENIZE

The collected ACE data already shows the impact of the cooking solution on a large set of SDGs:

1. SDG 7 (clean and affordable energy): 60 000 households now have access to clean cooking
2. SDG 13 (climate action): the subsequent reduction in greenhouse gasses by low CO2 burning rates and the slowing down of local deforestation
3. SDG 5 (gender equality): as the cooking is done predominantly by women, they save time not collecting wood/fuel freeing them up
4. SDG 10 (reduced inequality): the inclusion of finacially marginalized communities in financing services

Verified impact data is captured in real time, delivered and displayed on a web-based, bespoke client dashboard which demonstrates the following benefits to financial investors:

• ACE’s Reduced Credit Risk: Financial data proves that customers repay their microloans regularly and on a monthly basis, while also providing a verified picture of the default rates
• ACE’s Positive Impact Outcomes: Cooking and Access to clean cooking data allow for the extrapolation of improved health, better quality of life and gender upliftment data when compared to the negative impact of traditional cooking methods
• ACE’s Real Time Performance Reporting gives the company an advantage over companies which rely only on static analog PDF reports to provide instantaneous visibility to investors in due diligence
• Digital Investment Platform Access has made the company eligible to receive a €5 million loan on the world-first digital impact investment platform that Proof of Impact will launch in the fourth quarter of 2021 with one of the world’s largest wealth management platforms
• Tokenization of ACE’s impact performance, e.g. GHG emission reduction can provide further operational funding. The company can sell their verified clean energy output tokens to companies looking to offset their own carbon footprint to hit net zero targets and who are (rightly) very skeptical about the supposed certified carbon credits that offer no verifiable evidence of the reduction of CO2 emissions.