By Julia Hawkins, Ashden PR and Digital Media Manager

Call me superficial, but I can’t help noticing that when you merge the sustainable energy and finance worlds you end up with a lot of MAMS (AKA Middle-Aged Men in Suits).

Niki Armacost is one joyful exception: glamorous, charming, and passionate about how social investment – or ‘impact investment’ as it’s known across the  the pond – can help the poor meet their energy needs.

British by birth and now a full-time New Yorker, Niki set up Arc Finance in 2008 to promote and expand access to finance for modern energy, clean water, and other basic needs to build the income and assets of poor people around the world. Arc Finance has worked with many Ashden Award winners over the years, including the Solar Energy Foundation, ECAMI, Solar Now and Sustaintech.

I chatted to Niki shortly after her return from the Rio Summit in June…

JH: What were your reasons for setting up Arc Finance?
NA: My background is in microfinance, but I’ve always been interested in social impact and social investment more broadly. I realised that there was a lack of mechanisms that would allow poor people to afford sustainable energy products and services. So I set up Arc to try and increase the range of financing models available for end-users.

JH: What different financing models are there?
NA: There‘s a growing range of them now. Microfinance is the most obvious, and there are a number of different variations within that model. For example some organisations, such as Grameen Shakti in Bangladesh, provide both microfinancing and solar products themselves. Then there are partnership models, where a microfinance organisation will partner with a solar energy company. This is what SELCO in India does in partnership with SEWA Bank. There are also organisations like this year’s Ashden Gold Award winner SKDRDP in India, which helps people plan their energy needs, points them to a list of approved suppliers and finances the energy products.

Payment systems are another model.  We think that ‘pay go’ systems -which enable people to pay for their energy in small amounts - have tremendous promise. They are very similar to the old meterised system you might remember in the UK when all you had to do was put your 5p in the meter and the lights would come on!   People pay for their electricity when they need it, rather than on an on-going basis. This is really valuable for people who might leave their homes for several months every year to find seasonal work – they don’t have to pay for their electricity when they’re not at home.

It’s an old-fashioned idea but it uses technology to increase energy access in a thoroughly modern way, since the meters can be operated by tokens provided through cell phones or through Radio Frequency Identification (RIFD).

There's a real buzz about mobile banking for the poor. What are your views on it?
This is another form of finance for the poor that could be harnessed to increase access to clean energy.  For example in Kenya and Afghanistan there are phone companies that allow customers to use their mobiles to pay for grid electricity. There’s a lot of traction for mobile banking in East Africa, as there’s very high mobile phone penetration – so extending that principle to purchasing clean energy isn’t hard.  The great thing about it is it represents South-North tech transfer – mobile banking has pretty minimal penetration so far in developed countries!

Microleasing is another interesting model being piloted by Stima Systems in Kenya.  Here, the client doesn’t own the device but pays a small sum each month for the use of it.  The advantage for the client is not only being able to pay in small amounts, but also the fact that they get upgrades as new products become available.

JH: What other financing models do you see being used to help increase access to energy?
NA: The whole area of remittances is very exciting.  To give you an idea of the scale of it, money sent home by migrant workers represents a huge financial inflow to developing countries - around $325bn every year.

Being able to channel this money to help poor people access clean energy is potentially very exciting. In 2009, we did some market research in Haiti and the Dominican Republic which found that between 10 – 25% of remittances sent back to home countries were used for some form of fuel – mainly kerosene or petrol. We’re now working with the Inter-American Development Bank (IDB) and the Clinton Bush Haiti Fund to pilot a project in Haiti whereby remitters send sustainable energy products through a remittance platform operated by remittance company SogeXpress to their relatives back home, instead of simply giving them cash.

JH: Has there been much appetite for this – surely people would prefer to just have the cash so they can spend it on what they want?
NA: Really surprisingly, there has been so much appetite from Haitians in the pilot that the remittances company has now extended the number of sustainable energy products it provides! One development we hadn’t anticipated is that some people aren’t just using the products for their own use, they’re setting up their own microbusinesses such as mobile phone charging businesses.  I think there’s real potential for this to expand elsewhere – in fact we’re already running a similar pilot in Bolivia, this time funded by the Nordic Development Fund.

JH: You went to Rio in June – any reflections you’d like to share?
NA: If you read the news after Rio you could be forgiven for thinking it was all a complete waste of time. But it was obvious to me when I was there that there was a lot of very sincere interest from a really broad spectrum of actors in making a difference in this field. Some of them had already decided what they want to do, some are still working it out.  Initiatives like the Norwegian’s “Energy+” and the ADB’s “Energy for All”, as well as “Ecomicro” and “Climate Scope 2012” pioneered by the IDB/MIF can all potentially play important catalytic and complimentary roles in opening up financing for the poor.

The fact that there was an Energy Day at the summit, and a high profile for Ban Ki Moon’s International Sustainable Energy for All Initiative, was also hugely important. This is what matters, not what happened in the formal negotiations. And because of that, I’m very optimistic about the future.