I was fisked today [in a gentle way], it was actually a small honor in this case, the author of The Powerhouse School Concept bog post I wrote about yesterday, Willis Eschenbach, did me the honor of taking some of his time to respond to my comment almost point by point. I actually appreciate this kind of critique, and in this case also garnered some appreciation for some of the points I was making and general agreement on others.

As far as I know Willis hasn’t figured out that the ping-backs to his post are coming from here and hasn’t read either of these two posts.  Or, maybe he has better things to do.  Of course he is welcome to comment or guest post here.

I think the greatest bone of contention arose between Willis and I over my insisting on emphasizing the importance of economic development for the adults in his community based scheme, which Willis seemed to interpret as a downplay of his scheme’s educational aspect.  This was not my intent at all.  My intent was to express that both were equally important and that there was a danger of one undermining the other.

Willis Eschenbach fisks me

September 29, 2013 at 11:55 am

I’m in complete agreement with Willis about “expensive energy kills poor people”.

…

I really like the bit: “If it doesn’t pay, it doesn’t stay.” This is the ultimate economic reality in much of the world were there is no surplus to spare for someone else’s bright ideas.

Yeah, it’s my own invention, the First Law of Village Development.

Some first thoughts:

I have to ask, what will really change with the Powerhouse School Concept? I like it on the one hand, I think it has potential to fill a niche need, and I don’t like it on the other hand because I don’t think it will really solve the problem of lack of rural development and may have some unexpected social repercussions.

How much new wealth or economic activity will Willis’s scheme generate? Willis is a pretty astute analyst when it comes to the numbers, but I wonder if he has missed some possible negative outcomes: like what happens to the guy with the donkey cart? and what happens to the guy who was running the charging business out of the back door of the sawmill powerhouse, and what about the sawmill truck drivers in between? These people represent economic activity and personal income that are at risk of being co-opted by the Willis’s scheme.

If there is a system already in place, then the best thing is to co-opt it in some sense, and build on it. Don’t oppose it, work with it.

I have to ask because I’ve spent enough time myself out on the Reservation with tribal peoples to understand how these businesses often really run. I don’t know, but I suspect in Willis’ Paraguayan example that the real cost to the sawmill of diesel fuel, operator, and capital expenses were not being fully captured in the price of recharging the batteries – that is if all of the electricity wasn’t being out and out stolen from the mill’s owner and the costs to the enterprise had more to do with bribes and payola than no.2 diesel and motor oil.

One factor that differs between Willis’ program and the Paraguayan model is that the latter had almost no capital costs of its own. The generator and all of its capital and overhead expenses is paid for the mill, the donkey cart already paid for, there is a [small] available supply of used car batteries around that are inexpensive enough for the farmers to obtain – probably because they are too decrepit to start a car.

Indeed, that’s an issue. Since the system has never actually been built, I don’t know the answer as to whether it will pay capital costs. If it were my business, I guarantee I could make it pay if the market were even halfway there. Obviously, it won’t work everywhere, and if the folks don’t feel they need electricity, more power to them. In that case I’d set up a cell-phone charging station.

The more successful the Powerhouse School Concept becomes the more it will push the economics of return-on-investment into the area of having to deal with users having to pay for new auto batteries more often, or more expensive deep-cycle batteries up front.

Again, one of the strengths of the plan is that it is very incremental. You can have whatever you might be able to afford in the way of batteries.

I like that Willis’s proposal is containerized and probably modular. There seem to be a possibility of significant economies of scale, as well as making the scheme turn-key and franchisable. Keep the consultants out of it, but leave the design to professionals. Big plus.

Indeed, all of those are important.

Question is, will it “pay” in reality? and who will finance the initial capitalization of operation?

Fortunately, you don’t have to have an entire setup to figure that out. You can start with a couple of panels and a couple of batteries. You don’t need a container or anything more than that. Do that for starters at some school, and see where it leads. If it doesn’t pay, it doesn’t stay.

I’m sure Willis has costed all of this out, but as a business proposition his scheme has has to bear much more financial responsibilities for its own upkeep than the original Paraguayan model. As Willis mentioned, people in these circumstances have irregular incomes. Businesses have difficulties with irregular incomes when they have fixed capital expenses. If the scheme is not able to help create real economic development in the adult population of the communities it serves then it will always be at grave risk of not being able to “pay” – and it won’t “stay”.

Batteries full of 12-v electricity is usable for so many things, from lighting to communications to arc welding. I’ve seen wedding receptions going on after dark, lit by nothing more than car batteries and strings of lights.

I like the educational and technical training aspect of the program but I don’t like the child labor aspect of the program. Does the income from the scheme pay the child workers? The school? The schoolmaster?

If you said that to someone in the third world, their jaws would drop to the floor. Students are not coddled in the developing world. Frequently they are expected to work, and work hard, for the schools. Most schools have gardens and kitchens … and the students are expected to work in the gardens and kitchens. Plus there’s usually no such position as “janitor”, the kids do the sweeping and cleaning.

Finally, for them, the chance to first learn to work in an actual business, and then if you are interested to learn to run that business is an educational opportunity beyond compare. Remember that in developing countries, unless your family is in business, it will often be a deep mystery to your children.

How do the impoverished parents pay their own kids for the household electricity? If the Powerhouse School doesn’t help alleviate the problem of adult non-employment then all you will wind up doing is exacerbating the problem of the flight of human talent, young people, and resources to the city, leaving everyone else much as before. The kids are going to move to a grid connection once they figure out electricity and that real work can be gotten out of it.

If your claim is that education is bad because somehow it might take kids out of the village, I fear I don’t know what to say to that. Don’t educate kids? Not up for that one.

Particularly since electricity generally is of benefit to the economic situation, for a host of reasons. I lived off the grid for some years, and electricity from the sun was all I had. I learned among other things just how important that is, and how much real work can be gotten out of a 24-volt system.

The Powerhouse School concept may be some kind of a stop-gap, but at some point you have to raise the threshold of electricity use for these people to the realm of ‘modern’. This is something I hope most people can agree on because – expensive energy kills poor people.

I would not call it a “stop-gap”. It is an educational program, designed to give people the skills and abilities needed to provide and maintain an electrical system. Whenever they may get grid electricity, that will be an advantage.

I like the idea that the project will be supervised by someone with some education and social independence [especially social independence] in the village, the teacher, but I also don’t like the idea of concentrating economic activity at the school, government run or otherwise.

Since the students will be deeply involved in the business, being taught how to do the books and price the services and such, that will help because of the transparency. And the excess money going to the school? Most schools in the developing world are flat broke all the time, so the money will be more than welcome.

Unfortunately, in my last analysis, if ideas such as the Powerhouse School are not protected by an “open-access order”† society, then it will likely remain marginal and incapable of producing the real kinds of change and development that the undeveloped nations desperately need.

I don’t care if it’s open-access or closed-access. I don’t care if the profits go to the school or are siphoned off by the Principal. Oh, those are real issues, and as you point out they’re worth addressing. But to me, the important questions are,

1. Are the kids learning to operate and run the systems and maintain the batteries, and also (for those interested) learning to operate and run the business?

2. Are the people getting electricity?

If the answers to those questions are “yes”, then the rest is gravy …

Thanks for a number of interesting comments,

w.

My Response

Willis,

Thanks for taking the time to “fisk” my comment – its an honor.

I think in general we probably agree on many issues. You seem to be focusing on the technical/engineering side of the problem; I’m focusing on the system side of the problem. From my view of the problem it really matters if a society is a “closed-access” or “open-access”† order. Whether or not a society possesses this key cultural factor is the biggest stumbling block to them being able to develop to the point that they can afford their own solutions without massive foreign aid and perpetual intervention. Education by itself is not sufficient. Technology by itself is not sufficient. There must be open access to productive activity.

If you said that to someone in the third world, their jaws would drop to the floor. Students are not coddled in the developing world. Frequently they are expected to work, and work hard, for the schools.

Yes, I might well have been laughed right out of the room. The lack of productivity of the adult population is so thoroughly accepted as the basis of economic reality that anyone who presumes otherwise is laughed off as crazy – or from another world. Believe me I get it.

You wrote about Lesotho in your previous article:

These days, curiously, most of the time the country is populated by old folks, and women and kids—the only real employment for hundreds of miles around are the mines of South Africa … including the coal mines. So the men are all at work in South Africa, and the country runs on the money that the miners send home.

This is not curious at all, the is completely indicative of the failure of a closed-order society to be able to develop itself.

I see the problem in much the way described by Pielke the Younger‡ last year: 3.9 Billion people globally needing to be raised up to modern levels of energy access and a developed world, feeling threatened by the prospects, wants to put a brake on electrical access of the developing world that is somewhere around the level of bare “energy subsistence.” I see a need for solutions that ultimately raise this entire population up to modern standards in such a way that they can afford it largely on their own – and without breaking any rules:

“What ever the solution is it must work, it must be affordable, it shouldn’t break easily, it must be repairable, the parts available, and it must not make anything else worse.”

Yes, the fist steps will be smaller scale, local, and will be in-fills along the fringes, but at the same time we also have to be able to power entire societies – billions of people.

Just to clear up a few points. I am as much concerned about the general lack of productivity of the adults in the undeveloped world as the education of the children. We’ve both been there and seen how hard everyone works, this isn’t about coddling the kiddies. We both probably know exactly how bad the real child labor situation is throughout the world. That problem is deeply entwined with lack of employment and productivity in the adult population.

Some thoughts on Lesotho

Another commenter John Ledger, someone who worked on the World Bank sponsored Lesotho Highlands Water Project from 1988 until 2012 had some very interesting comments to make on Lesotho, one of the examples Willis had used in his discussion in his original thesis Expensive Power Kills Poor People.  First some preliminary bits:

Economic conditions in Lesotho have improved vastly since I first went there in 1988…

¶…

…This once impoverished little British Protectorate actually has lots going for it these days. The water project has secured millions of dollars in royalties every year for what they call the “White Gold” in Lesotho…

¶…

This money comes from water consumers in the area served by Rand Water, a huge undertaking that supplies clean potable water from taps across a vast area of South Africa and supplies millions of consumers.

¶…

Interestingly, and from what I have seen over the years, none of this compensation money has been used to invest in electricity supply! There are plenty of business plans for using the money for other enterprises, like maize grinding mills, schools, taxis and road-building.

Now to the heart of the matter.

The LEC (Lesotho government electrcity utilty) has been very active in stringing 11 kV overhead lines into rural areas in Lesotho. There is no problem delivering electrcity into rural or urban areas of Lesotho, and the country is linked to the South African grid with a current capacity of around 44 GW. The problem, that many of you have easily identified, is the cost of buying that electricity! It is simply not affordable for resistive loads. So Africans simply have to use biomass or fossil fuel for cooking and space heating. No debate! There are lots of improved biomass stoves on the market – they use less fuel to make more heat and emit less dangerous emissions.
In the remote Lesotho Highlands biomass is used for cooking and heating – this may be woody shrubs that one sees being carried on the backs of donkeys…

For lighting and data (TV, lights and computer) we have PV modules and batteries that do work reliably most of the time. The PV and LED lighting scenarios are getting better every year, and there are plenty of good suppliers of good equipment in this part of the world . Let’s also please not encourage poor rural people to think that they can use failed car batteries to power home PV systems – they can’t!

Economic conditions have improved, that’s very good news to hear.  But the economic reality remains, without the economic development extending into the hinterlands people still cannot afford to pay for even grid electricity even if it is brought to their door through a well implemented World Bank funded hyrdro-power project.  I take this as confirmation of my thesis about the necessary ingredient of adult employment and development.  Even when tantalizingly close to fully modern energy access, a simple economic reality forces the whole region back into dependence on biomass fuel for cooking, heating, hot water, and washing.

The other danger that Lesotho faces is that of the resource curse, namely that the easy money from the “white gold” of the water project, becomes a source of the several ills associated with such easy money:  graft and corruption, revenue volatility, excessive borrowing and the so called ‘Dutch disease’.  Here again a more broad based economic development helps guard against such problems.

A Side Bar Disagreement

Along the way with this discussion I was having a kind of side-bar disagreement with another commenter, which also boiled down to a basic misunderstanding about the scope of my intents.

My intents in these two articles and my comments over at WUWT is to propose that energy access strategies should offer the remote rural poor, even those way up-river, a way out of the iron age, not merely to make their iron age lives easier and more secure – if they want it – some don’t.  Maybe all they really want is a smart phone.  But some clearly do want to be able to develop, and we should help them in some positive sum way.

I’ve been there too, been their guest, eaten their food all of that.  Nice people, when they feel safe with you, but I don’t romanticize tribal life, that’s the childhood of Humanity.  We are now on the threshold of adulthood – adolescence has been a bitch.   There are things worth remembering from our tribal pasts, things that keep our social relationships, and some of the more primitive portions of our psychologies on an even keel, but there are also a bunch of things worth forgetting.

Uncle Terrence offered the idea years ago that eventually our technologies would become small enough and immersive enough that we’d all go back to the jungle wearing nothing but our digital appliances like a string of beads around our necks.  So maybe all these people have to do is just hang out on the fringes long enough that someone will come along from the outside world and hand them a necklace.

I’ll leave you all with this TED talk from Swedish medical doctor, academic, and statistician Hans Rosling: The Magic Washing machine about the significance of the role of the washing machine in modern society.  [click on the link above, the image is just a .JPG.

Enjoy

W^3

† The Natural State: The Political Economy of Non-Development, Douglass C. North, John Joseph Wallis and Barry R. Weingast; UCLA Center for Comparative and Global Research, 2005