Tackling the issue of energy poverty in Timor Leste.
When lighting his family's home in Turiscai, a small, rural village in Timor-Leste, Ananio Rodriguez had few options. He could purchase a few days' worth of kerosene or a few small candles. At best, both of these options provide barely enough light to work after dark or let his children study. In all likelihood, they also cause negative health impacts and drain the little income Ananio earns. To charge his cell phone, Ananio had fewer options still: investing valuable time to walk to the nearest on-grid electricity source and paying to recharge. In reality, he usually just left his cell phone off.
Simply put, the lack of access to reliable energy services in Ananio’s village was a significant source of vulnerability for his family and created a barrier to development.
This challenge is common in under-developed areas with high poverty rates. And it’s one that Mercy Corps and many others have been trying to address in recent years. In 2011, Mercy Corps began our Energy for All (E4A) programme in Timor-Leste. Our goal: building sustainable market systems for clean energy products for peri-urban and rural communities. We wanted to improve energy options for people like Ananio, but also reduce the cost of energy to his household – both financial and social – through access to solar energy products and clean cookstoves.
Mercy Corps' E4A programme targeted two main problems that hamper the emergence of sustainable energy markets:
- Poor availability of quality alternative energy products, and,
- Limited demand for affordable and reliable alternative energy products and services.
By the end of the three year programme, Ananio’s family and 10,000 households like his now have either a clean cook stove or a solar lantern (some with phone charging capacity) and 26 villages have community solar systems, providing clean and reliable basic energy services for thousands of people.
Is this success? The 10,000 figure meant we surpassed our stated targets and the project could be considered successful under traditional measurement standards. But the real question Mercy Corps wanted to understand was this: did we truly succeed in building a sustainable energy market?
As we dug in, we wanted to explore:
- Will the local shopkeeper who sold Ananio his solar lantern continue to provide a selection of energy products appropriate to the evolving needs of his community in the years to come?
- Will new energy delivery models develop through these market actors?
- Has the project catalysed lasting systems change?
In 2014 at the conclusion of the programme, we conducted a case study to analyse our approach. The study, Illuminating market systems development: a case study of the alternative energy market in Timor Leste summarises the key lessons that may be applied to other market systems development programming in similar fragile settings.
Market systems development (MSD) is an approach that that seeks to change the way markets work, to create large scale, and lasting benefits for people living in poverty. The approach hinges on facilitation, rather than direct implementation, and requires a radical shift in how development actors like Mercy Corps design and implement programmes. The theory of MSD is well documented, but there is relatively little information or analysis about how it works in practice, particularly in fragile markets or contexts transitioning from relief to development. Given its relatively recent conflict with Indonesia, unreliable distribution systems, weak market actors and limited supporting services, Timor Leste provides an interesting place to explore how strategies and intervention tactics are tailored in fragile environments.
But why is energy access a suitable challenge for MSD? This field represents a great opportunity for three reasons:
- Advances in technology for these markets have resulted in a wide range of affordable products. In Timor-Leste, a full range of solar lanterns are now available at realistic price-points for families like Ananio's from very basic single lights to multi-light units and phone-charging capabilities.
- Energy is a service that even the poorest households pay for. For Ananio, it meant spending a large chunk of his income on expensive, smoky kerosene lanterns or short-lived candles.
- Market systems for household energy products already exist. Even in the weakest markets. In rural Timor Leste Ananio could walk to the local shopkeeper and pick up candles or kerosene.
Why not capitalise on the existing market channels, working with them to offer cleaner, more reliable, and more affordable products to these last mile consumers? This is what’s promised using a market systems development approach.
Working through and strengthening existing market channels, market systems development offers genuine opportunities for scale. By involving market actors truly embedded in the target geographies, like local shopkeepers, it’s not reliant on donor money or single product lines to continue working in the future.
But this approach isn't without its challenges. Identifying appropriate market actors capable of (and interested in) reaching the true base of the pyramid is tough—and that’s where the truly high social impact exists. Our Timor-Leste experience taught us that appropriate market actors might need deeper and more ongoing support than we initially imagined, and the flexibility to do this as needed within a programme framework is vital. How can we identify the actors most suited to changing the market system long term? What kind of support do they need? How do we understand their incentives and the informal norms that may strengthen or undermine our efforts? How can we use subsidies strategically, intentionally crafting them to incentivise, not undermine system change?
These and other questions are explored in the E4A case study. Mercy Corps’ E4A programme is an early example of an application of the MSD approach in a transitional ‘relief to development’ context. Through the programme we encountered some of the challenges of working in these settings, and the case study pulls together some key lessons we wish to share.
Ultimately, our aim is to ensure families like Ananio’s have access to energy that meets their needs without draining the piggybank and that access is sustained locally after Mercy Corps has left. But how we make that happen is the question. Read our case study to explore our key lessons and how they might apply to your work: Illuminating market systems development: a case study of the alternative energy market in Timor Leste.
This blog was written by Emma Proud and David Nicholson.
Emma Proud is a senior advisor in Mercy Corps' Economic and Market Development technical unit. Mercy Corps fosters appropriate economic development in some of the world's most challenging places. Working in over 40 countries, Mercy Corps engages with public, private and civil-society actors to increase incomes, reduce expenses, and build resilience of the poor and most vulnerable.
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