When two concurrent earthquakes ripped through Nepal in April, Jason Gray felt the aftershocks back in Toronto.
The co-founder of SunFarmer, a Toronto startup that offers long-term financing for solar energy systems in underserved regions, has spent the past two years setting up projects around the country and understood what a natural disaster of this scale meant for the people on the ground.
“Unfortunately Nepal has a history of being a difficult place to do business and a difficult government to deal with, [so] it’s been difficult for many of the relief agencies to work with them and get relief aid into the country,” Mr. Gray says.
He also had to make sure his team in Nepal was accounted for, a challenge when cellphone access, dependent on an energy grid that is limited in the best of times, had been completely destabilized.
Thankfully, everyone was fine. Once his worry could safely change course, he pulled together donations for 1,300 solar lanterns, 90 portable charging stations and two water purification systems, some of which are still en route thanks to logistical challenges.
These relief efforts are often the difference between a natural disaster and a national calamity. An area with a robust, well-serviced infrastructure and a functional government often means fewer casualties and quicker recovery.
Sadly, Nepal is not one of those places. Fractured bureaucracy, political instability, and a terrain that makes for precarious living conditions contribute to the many reasons development has eluded the small Himalayan nation sandwiched between China and India.
For precisely these reasons, Mr. Gray and his New York-based partner, Andy Moon, set their sights on establishing SunFarmer’s pilot projects in the region.
“We’ve been very fortunate to raise more than $3-million largely focused on Nepal. We see a large scaling opportunity in the impact investor space, which is a relatively new space in North America,” he says.
SunFarmer is a non-profit organization that delivers “robust solar energy” systems to communities removed from a major grid source. More than two billion people live without access to a steady source of electricity, a problem that can be remedied by harnessing sunlight, the one resource many of these regions have in abundance.
Solar panels convert sunlight into electricity by collecting the energy released by photons, atomic particles created in the sun’s centre that transmit light over space.
The panels themselves are made up of photovoltaic cells, semiconductors that convert the photons into direct current electricity.
Many companies attempting to bring solar energy to these regions focus on small-scale, affordable residential products, like solar lanterns. Mr. Gray, who helped set up Canada’s first broad-scale solar power project just outside Napanee, Ont. in 2009, saw the potential impact of renewable energy in developing countries on a broad scale.
By eliminating dependency on diesel and kerosene, remote communities can save money and reduce pollution. That’s where size matters. A three-kilowatt solar panel, which would probably be used for a single-family residence here, can provide reliable electricity for an entire hospital in Nepal.
Access to a reliable power source has far-reaching effects most people take for granted. For instance, donated medical supplies that pour into these hospitals can’t be properly utilized unless they can operate: It’s hard to explain to a person on oxygen that their air supply may take a dip during a thunderstorm. When local governments see clinics improving their functional operations, they’re more likely to invest in public health initiatives.
Farmers in remote rural areas have also been kept in a cycle of poverty for the same reason. In Indonesia, where Mr. Gray has set his sights on agricultural partnerships, many farmers can only access the power to irrigate their fields for one-hour blocks.
This causes them to over-irrigate in that short access period and ultimately limits their yield; instead of producing several crops per year, which would increase their household income and allow their children to go to school, they’re stuck with lower value crops because they don’t trust their own water source.
But at $10,000 to $20,000 a pop, SunFarmer’s systems are hardly chump change, particularly for economies strapped for basic needs. That’s where the startup’s bold business model comes in to play.
Clients are expected to front a 20 per cent deposit, then receive a five-to-seven-year financing plan to pay off the rest of the system – currently the longest rate in the market, where the average financing cycle runs between 12 and 24 months.
While risky, there’s a reason SunFarmer chooses to do business this way: With a prolonged financing period, the monthly cost of solar energy becomes competitive to the cost of diesel generators.
“The cheaper we can make financing for these products that need markets that’s where we’re going to have fundamentally changed the landscape for other clients that need solar,” Mr. Gray says.
It’s more than nickels and dimes, though. Real development begins the moment a community starts to believe in its own ability to scale and grow. Taking responsibility for a large economic project, like a large solar panel, is vital to that psychological shift.
“The only way it can be sustainable is if accountability and sense of ownership exists,” says Mr. Gray. “We feel the accountability of repayment is important and we want to create the relationship that if the system stops working, they have the right to stop payment or we issue a grant until the problem is resolved.”
To that effect, SunFarmer contracts local engineers to make sure their clients keep best practices. There’s nothing’s worse than a bunch of people from Canada or the US flying over, bringing money, bringing systems and not enabling local ecosystems, Mr. Gray says.
Since they launched in 2014, the company has powered 10 health clinics and schools in the Nepal area that service nearly 30,000 people. By 2020, their ambitious plan is to boost that number to 4,000 projects across India and Southeast Asia, a number that has the potential to reach 7 million people.
If their financing model continues to work, SunFarmer will also push their scalability, jumping up to $100,000 mega-kilowatt systems that can boost the grid in urban areas.
Whatever the result, Mr. Gray has learned to temper his expectations.
“Coming from a business background, our 10 projects in the first year doesn’t seem like much. But we talk to our friends in the development space and they’re like, “Oh my god, you did 10 projects in your first year? That’s awesome,” he laughs.
“So it’s been a recalibration for us for-profit guys.”