SKG Sangha

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Overview

Financing Household Level Biogas and Compost Production Through Carbon Credits

Overview

Headquarters: Karnataka, India
Established: 1993
Impact Areas: India, East Africa, West Africa, Asia, Central America
Type: Nonprofit
Energy Sectors:
Business Model Types:
Staff Size: 200
Annual Budget: $3,500,0000
Major Funders: GoodPlanet,CH4NGE,  Myclimate, AFD, BNP Paribas, and various governments, Corporate Social Responsibility (CSR) funds
Awards: 2006: Sustainable Energy Association Award,
2007: Ashden Award, Entrepreneur’s Forum Social Entrepreneur Award
2008: Mother Teresa Excellence Award, El Award, CSTS Tech Award

ABOUT

SKG Sangha designs and implements large-scale household level biogas digester projects providing entire rural villages with digesters for cooking fuel and vermicompost fertilizer.

 

Energy Products/Services

Target Market

  • Users of fuel-wood for cooking
  • Dairy farms and other farmers with livestock
  • Organic waste producing industries interested in treating the waste

 

skg sangha

Revenue Streams

  • Carbon credits
  • Waste management consulting
  • Turnkey job works for industries/corporate sector and institutions

Value Proposition

  • Projects are 80% financed through carbon offset sales.
  • Production of cooking fuel saves families 2-3 hours per day collecting firewood, which means better education for children and improved nutrition, in addition to reduced woodsmoke in houses.
  • Vermicompost produced from digesters can be sold or used to increase farm production, and can increase family income by 50-100%.
  • All digesters and composting are controlled by women.
  • Each digester offsets 5.9 tons of carbon per year.

Problem Addressed

  • Fuelwood for cooking fires is scarce in much of India.  People cannot afford natural gas or LPG, and so cut down trees without replanting and spend several hours per day looking for fuelwood.
  • Traditional cooking methods are often polluting, unhealthy, and heavy carbon generators.
  • In addition, many farmers lack access to inexpensive organic fertilizers.

Where They Are Now

Impact to Date

  • Installed over 250,000 improved wood fuel stoves.
  • Installed over 100,000 family size biogas digesters

Milestones

  • 1993: SKG Sangha founded
  • 2007: Started using carbon credits to finance projects, and increased units installed per year by 450%
  • 2011: 100,000 units installed to date

Growth Plan

  • SKG is working with partners in other countries in Africa, East Asia, and Latin America who are seeking funding to replicate its model.
  • SKG wants to reach 100,000 more families in the next 3 years.

How They Deliver

Product Sourcing

  • SKG’s biodigesters are built into the ground at project sites.
  • Stoves are sourced from other organizations.
  • SKG has 3 general types of biodigester and selects which one to use for a particular project based on local conditions.
  • Units last 25 years

Distribution

  • SKG’s projects are generally on the scale of 10,000 biodigesters, and cost an average of US$7.5 million.
  • 30% of families in a project area receive a biogas digester and 70% receive an efficient stove.
  • Families receiving digesters are chosen based on their feedstock capacity (animals to provide dung), willingness to abide by SKG’s conditions, and capacity and willingness to produce fuel and vermicompost with the digesters.
  • It has generally not worked to give a single unit to multiple families to operate jointly, as no one family takes ownership and responsibility for their unit.
  • All biodigesters are managed only by women, who also collect all income.  In addition, families must use 50% of fertilizer produced for their own crops (the rest is sold), send their children to school, and plant two trees.
  • Conditions are enforced through community peer pressure, and SKG checks 5% of villages every quarter.
  • All units in a village are built simultaneously over a period of 1.5 months by SKG contract construction workers with in-kind support from villagers.

Financing

  • Until 2007, when SKG started using carbon credits, its projects were 60% financed by the Indian government, which offers this subsidy on village fuel use.
  • However, SKG’s scaling capacity was greatly limited by the number of projects the government could fund.
  • While it also sought other donors and CSR projects, and paid for some projects from other work doing waste management consulting for corporations, from 1993-2007 it implemented a total of only 43,000 units.
  • From 2007-2011, SKG has installed 57,000 units, 80% financed by carbon credits.
  • SKG is now looking at scaling even more rapidly by borrowing from banks to finance projects which it will then sell the carbon futures for, so that it can begin implementing projects even before it has found all the carbon buyers.

Revenue & Affordability

  • A single digester costs $320, and the vermicomposter costs another $220
  • Villagers are expected to contribute 12-20% of project costs, and this is all contributed in-kind by provision of sand and other building materials, construction help, and food for workers
  • The rest of project funding comes from government, donors, or carbon credits.
  • SKG does not take cash from beneficiaries, as this often costs more than it brings in.
  • Occasionally, in higher income villages, SKG has built projects in partnership with banks offering villagers credit to pay for them.  They don’t use microfinance because the interest rates are too high.
  • Village women selling compost earn approximately $240 per year, which can increase family income by 50-100%.

Carbon Credits

  • SKG has certified its digesters to each offset 5.9 metric tons of carbon per year.
  • Since 2007, SKG has been obtaining financing by selling 10 year fixed term carbon credits on the futures market at 17.5 euros ($26) per ton.
  • Normally carbon offsets sell for 10 euros ($15) per ton, but because of the social benefit of SKG’s projects, it has been able to convince social buyers to pay the higher rate.
  • This can actually be a profitable investment, because SKG’s digesters have an expected lifetime of 25 years, which means that buyers can convert the 10 year fixed credit into a 7 year renewable credit that can be renewed 3 times, providing them with 21 years worth of offsets for the price of 10.
  • Document preparation for carbon credits is very expensive, especially because SKG does not always have the in house capacity.  It estimates it would pay 1/4 the cost of preparation if it could do so in-house.

More Resources

Online Resources

Contact Information

No. 532, 2nd Main Road
Gandhinagar
Kolar, Karnataka
563101
India

( +91 9844160038
* info@skgsangha.org