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62 MICROPOWER: THE NEXT ELECTRICAL ERA DEVELOPING MICROPOWER “SOFTWARE” 63 on direct donor assistance, some observers are doubtful that large international institutions will be able to attract sizable private sector cash flows. Others are concerned that multi- lateral funding of small-scale power will inject hundreds of millions of dollars and create expectations of instant returns, or take the approach of a social service rather than that of a socially responsible business. Criticizing the Bank’s project- by-project efforts as piecemeal, President James Wolfensohn has called for “systemic change” to make renewables (and possibly other distributed power) a major element of bring- ing electricity to the nearly 2 billion people without power.135 One such change might be for the Bank and other mul- tilateral financiers to establish dedicated venture funds for micropower startups in developing countries. Using the “patient capital” approach of venture capitalists, the funds would build sustainable micropower markets by nurturing indigenous companies rather than specific projects or tech- nologies. The World Bank could aggregate (and expand to other small-scale technologies) its existing solar and wind business ventures into a single fund.136 Such a fund might be patterned after the Bank’s recent- ly established $500 million venture fund with the Japanese firm Softbank to finance Internet startups in developing nations, with the aim of closing the “digital divide.” Just as it is drawing on Softbank’s Internet startup expertise, the Bank could seek out private investment partners with expe- rience in financing micropower startups in the industrial world. Combining the Bank’s contacts and experience in host nations and the startup savvy of micropower venture capitalists, this approach could attract far more funding than would otherwise be devoted to addressing “power pover- ty”—arguably a prerequisite to narrowing disparities in access to communication technologies.137 Other public and private sources can also be tapped. In the United States, 13 states will have roughly $2 billion from consumer surcharges over the next decade that they can use to remove market barriers to clean energy and lower its finance costs. Some insurers are exploring “electrofinance”: rolling the cost of a building-based solar or wind system into a commercial or residential loan or mortgage, as is often done for home appliances.138 The emergence of venture capital and microcredit for financing micropower is encouraging, given the track record of these relatively new approaches in spurring technological innovation and improving the access of the poor to new ser- vices. But these financial flows, while growing substantially from a small base, are a fraction of the roughly $200 billion invested annually in the global power sector in the 1990s, much of it for large central generation. The rate of future progress, furthermore, will hinge on the extent to which these technologies’ benefits are better valued in the market- place. As private investors awaken to their commercial potential, and public investors to their societal benefits, resistance to micropower-friendly market reform may well weaken. But getting people to see small-scale power as a financial opportunity, rather than a risk, is only one of many institutional challenges confronting the new technologies.139 Developing Micropower “Software” In 1995, two Harvard Business School professors published an article that soon attracted considerable attention. Joseph Bower and Clayton Christensen explored a range of “disrup- tive technologies”—radial tires, small copiers, personal com- puters—that leading companies neglected and customers virtually ignored at first. To the surprise of many people, these technologies did gain small footholds in niche markets, and then suddenly grew at steep trajectories, leading to technical improvements that enabled them to eventually meet the needs of mainstream customers. Companies at the top— Goodyear, Xerox, and IBM—were overtaken as small, hungry organizations anticipated demand for these innovations.140 The reason established companies were blindsided,PDF Image | Micropower: The Next Electrical Era
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