Biogas to billions
Member blog: Bringing Biogas to Billions – Why PAYGO Could be the Key to Scaling the Industry
By Ben Jeffreys – CEO ATEC* Biodigesters International
Small scale biogas digesters (biodigesters) have been around for over 150 years – they are by no means a new technology that convert animal manure into biogas for clean cooking and high quality organic fertilizer.
However the market potential is still miles ahead of the actual number of units on the ground. Excluding China (a government funded program) the number of small scale farmers who might benefit from a biodigester 132 million households according to our analysis. But only around 6.5 million systems have been installed in the last 4 decades, with the majority in India.
With my background in commercial business development this was puzzling when I first entered the biodigester market. I couldn’t understand the discrepancy between the product’s value and its sales. If the benefits of biodigesters are so clear (as you can see in the survey of our customers below), why doesn’t every small-scale farmer already have one?
It just didn’t make sense: Something in the market forces was amiss. After exploring this dynamic, we identified two key obstacles:
1. There were limited commercially scalable, quality-controlled biodigester systems available on the market.
2. Almost all the available systems would have issues being installed in the challenging environments – with flooding, high groundwater, cyclones, earthquakes, etc. – that affect up to 90% of small-scale farmers.
Taking these obstacles into account led us to establish specific design principles when developing ATEC’s system. That’s why our first patented design was a plug-and-play Model M4 system that can be installed instantly and in any environment. We have now sold over 1,300 systems across Asia-Pacific and there here has also been great success with other pre-fabricated options, such as the fibreglass systems in Vietnam, Sistema Biobolsa and Home Biogas.
However, as we’ve started scaling up we’ve realised that something even greater has been holding back the market – effective payment options for customers that spread the cost out at the same rate they save by using the system. Most don’t have the funds to pay cash up front for a system that can be up to a quarter of annual household income. While microfinance institutions have played a vital role with biodigester companies like ATEC* and will continue to do so, putting your land title at risk to buy a biodigester (as is the case in Cambodia) is a pretty high risk scenario for a farmer.
While looking at this problem, our team started to research where this had been an issue for other technologies. It was at this point that we came across the below graph:
This graph is from GOGLA, the global association for the off-grid solar energy industry. It shows the growth of solar units (in millions) since 2010. We saw the same potential for this kind of hockey stick growth in biogas, a market with many similarities to off-grid solar – yet it hadn’t happened. The difference? PAYGO.
Once we made this realisation, ATEC started investing in the development of our own payment technology. We saw that like solar we had a distinct advantage – the product only has to be delivered once – meaning that it was ideally set up for customers to buy the product, then pay it off as they accrue savings and income increases from the outputs of free gas and fertilizer.
Having developed a national distribution and an existing customer base across Cambodia, ATEC* is now at the exciting stage of introducing our PAYGO integration which will allow farmers across the country to pay off the system in manageable monthly repayments. And we have an additional advantage, in that we are effectively a second mover in PAYGO after solar. That means we can partner with leading PAYGO software provider Angaza, who have immense experience in PAYGO payment management and processing.
With our first commercial launch to occur in Cambodia this August, we are excited about the immense potential of biodigesters for Cambodian small-scale farmers: Their net income can increase by an average of $43/month by using one of our systems, but they’ll pay only $30/month for two years to purchase it. This means that even as they’re paying it off, they’ll be cash positive, with a rapid payback period of 1.5 years.
But for us Cambodia is just the tip of the iceberg. We’re working with investors to get operations in Bangladesh up and running. And we’re looking for partnership opportunities with biodigester distributors, PAYGO solar distributors and others who have immense networks of small-scale farmers, but to date haven’t had the right biogas technology mix.
Cooking with wood kills three times as many people each year as traffic accidents – with the majority of these being women. The market potential for clean cooking is in the billions, and ATEC will continue to trail-blaze to ensure that biogas is an integral part of reaching that potential.
Ben Jeffreys has worked previously in the corporate sector for Westfield Group and Baird Publications, then moved into the impact sector leading product development for Oxfam Australia then School for Social Entrepreneurs.
Ben then moved to Cambodia in 2015 to commercialize ATEC’s prototype into a social enterprise which was the winner of the inaugural Google Impact Challenge. In 2017, ATEC* secured a US$1 million Series A investment round by investors including Small Giants & Engie RDE. ATEC has sold over 1,300 systems across Asia Pacific including in Cambodia, Myanmar, Thailand, Bangladesh, PNG, Indonesia and Fiji.
To find out more about ATEC*