“We consider ourselves a fuel utility”
Why is clean cooking an issue?
Our main objective is to solve the health problem caused by toxic smoke. In Africa many people die from cooking-fire related indoor emissions. Moreover, charcoal fires exacerbate climate change. Traditional cooking fires across Africa cause more than a gigaton of carbon emissions per year.
Inyenyeri promotes burning pellets instead of charcoal. Why is that better?
Making charcoal the way it is done in Africa is literally a stone-age technology. We are leapfrogging to an innovative technology. Using pellets instead of charcoal reduces the amount of biomass needed by 90 %. This can make an enormous impact on climate change emissions, and will also help to reverse deforestation.
And you totally reduce the smoke?
Our fuel and stove system reduces household air pollution by 98 %. The pellets are gasified, so you are essentially burning gas. The cookers are as clean as natural-gas cookers are. There is no health risk. The stoves are actually quite sophisticated, but easy to handle and safe.
But you are not selling the hardware?
We are a fuel company – we buy the world’s best biomass-gasification stoves, then provide them free to our customers to use, as long as they continue to buy fuel from us. Just like in your home, the gas company provides the pipes that deliver the fuel, and you pay for what you use. Our approach is the same, which is how we can serve even the poorest households.
So you give your costumers the stoves as a present?
The stoves are leased for free, but we still own them. The only obligation the household has is to buy our fuel pellets to cook. We fix and repair the stoves as needed. According to a family’s size and income level, we provide enough stoves for the family to cook 100 % with the new system, and we monitor their pellet consumption. We know how many grammes per person per days is required, so we can tell from our statistics to what degree the households are using the stoves. If people fall back and use wood or charcoal every now and then, they lose most of the health benefit. So we go and check what is going on: Have additional people moved into the household? Is someone else cooking? If the household buys less pellets than it should, we ask them what has gone wrong. Did we not train you sufficiently? Do we need to repair something? If the problem isn’t sorted out, we reclaim the cooker and the contract is repealed.
You must recover the cooker costs by charging more for the pellets. Is that viable?
Yes, absolutely. Our fuel is so efficient, we can charge much less than the price of charcoal, and still cover our costs and make a profit. We believe that it takes us two to two and a half years per household for the pellet price to reimburse us the investment costs for the cooker, the pellet factories and our distribution system. Our experience is that we need five dollars per stove per year of maintenance and repairs. That is enough to make sure that the stove can be used for five to six years. And the current stove is not as robust as we would like it to be. We are pressing the manufacturers to provide us with stoves that are more robust so that they can be used for up to 20 years.
You could sell pellets for a much lower price if you did not invest in the cookers. What if someone else starts to sell cheaper pellets?
Well, they could only offer cheaper pellets if they built a big pellet factory. That would mean $ 10 million to $ 20 million investment, which looks prohibitive. And if our customers would buy their cheaper pellets instead of ours, they wouldn’t fulfil their part of the contract, and we would take the stoves back. So anyone who wants to compete with us needs stoves of comparable quality on top of cheaper pellets. That is really hard to do. We think that the first mover advantage in sub-Saharan countries is going to be quiet profound. First, we want to prove that the business model works in Rwanda. Then it’ll be easier to get additional investors, to expand in different countries. The objective is pan Africa. We are aware that someone might try to copy our model in another country and be the first mover there. If that happens, we hope that it will be a socially conscientious investor who ensure that poor people benefit too. It would be a pity if the system was only adopted to serve middle-class customers.
When do you think you will break even?
I think that will happen once we reach the range of 75,000 to 100,000 households, probably in 2022. We need economies of scale. Apart from selling pellets, we have another revenue stream. Our CO2 reductions are measured, audited and certified according to UN rules. The World Bank has agreed to buy our carbon credits at a very favourable price. If we create the credits, they must buy them at that price. The Kyoto Protocol’s Clean Development Mechanism (CDM) means that carbon reductions in developing countries can be used to fulfil reduction obligations of rich nations. The CDM will end in 2020, of course, but we are convinced that there will be some other kind of emissions trading in the future. That was agreed at the UN climate summit in Paris in 2015.
Which international agencies are supporting your work so far?
In the first eight years the funding primarily came from small private foundations. The Ikea foundation is the largest funder. Oikocredit has recently bought Inyenyeri shares for € 1 million. That will give us the kind of momentum that will give investors confidence. We are building a profit-making, private-sector business to solve problems that affect human health and the global environment.
Eric Reynolds is the founder and chief-executive officer of Inyenyeri. He is an entrepreneur from the USA who moved to Rwanda eight years ago. To present the Inyenyeri approach, he attended the Innovate4Climate conference in Frankfurt in May. It was hosted by the World Bank, Germany’s Federal Ministry for Economic Cooperation and Development and other partners.