The research partnership between Energy 4 Impact and the UK aid-funded Modern Energy Cooking Services (MECS) programme continues with the launch of the second report in our joint Financing Clean Cooking series.
The report Clean Cooking: Financing Appliances for End Users provides a snapshot of the current state of end user financing for clean cooking. The crucial problem in the clean cooking market as it stands is unaffordability: the vast majority of modern energy cooking devices are still sold for cash, but many of the poorest households in sub-Saharan Africa cannot afford the typical upfront cost of $30 and $100.
The provision of consumer credit is therefore an essential step in promoting the uptake of modern cookstoves amongst lower income customers and this report examines the pros and cons of a range of financing models for both consumers and clean cooking companies. The research indicates that layaway savings schemes are likely to become increasingly important for more aspirational cooking technologies. It also explores the emergence of new payment models, such as automated pay-as-you-go (PAYGO), energy-as-a-service, specialist asset financing, and potentially in the future, financing through electric utility bills.
Commencing with the recent publication of Clean Cooking: Scaling Up with Crowdfunding, the overall aim of the Financing Clean Cooking series is to generate more investment by identifying strategies to expand the adoption of clean cooking in sub-Saharan Africa. The research into key trends, such as the business models of cookstove companies, investor types, pathways to technology scale-up and barriers to capital-raising, provides a springboard for recommendations that can inform the actions of a diverse range of public and private stakeholders, particularly NGOs in sustainable development, clean energy donors and investors, and suppliers operating in the improved cookstove sector. The report calls upon donors in particular to make pivotal interventions in order to help scale up appliance financing and thereby stimulate market growth in the clean cooking sector.
Subsequent reports in the Financing Clean Cooking series, set to be published in the second half of 2021, will cover areas such as concessions for displaced people in humanitarian settings and results-based financing.