Market Acceleration of Advanced Clean Cookstoves in the Greater Mekong Sub-region

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Improved Cooking Cambodia, Vietnam, Laos

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Countries
Technologies improved cookstoves (ICS)
Partners Cambodian Ministry of Mines and Energy (MME), Laotian Ministry of Science and Technology (MoST), Vietnamese Women’s Union (VWU)
Implementers GIZ, SNV
Outcomes Access to modern cooking:
  • 59,000 people with access to advanced biomass cookstoves


Title-Stove auction.jpg

Energy Situation

In Cambodia, Vietnam and Lao PDR, over 65 million people cook on traditional biomass cookstoves and contribute to local natural resource degradation. The stoves generate significant amounts of greenhouse gas emissions and smoke that pollute kitchens and ambient air. According to the WHO, no less than 60,000 people die in these countries each year because of inhaling smoke produced by burning biomass for cooking. This health hazard can be drastically reduced by advanced biomass cookstoves (ABCs) that are cleaner, more efficient and safer compared to traditional cookstoves.

However, the super-clean gasifier cookstoves that achieve lowest levels of pollution are inaccessible to millions of people in the Mekong region who continue to cook every day on smoky traditional stoves.

Approach

This project was finalised in 2018.

The project aimed to start and accelerate sustainable markets for these clean smokeless cookstoves and use an innovative results-based financing (RBF) approach that strengthens nascent supply chain actors.

The project created an Auction Platform in each country as a dynamic market-based mechanism to determine required RBF incentives for self-sustaining market development for ABCs. In Cambodia, the project focuses on imported ABCs and connecting international stove manufacturers with local clean energy technology distributors, while in Vietnam and Lao PDR the intervention focuses on the potential of local manufacturers to bring ABCs to the market.

The project offered financial incentives for pre-defined results to private sector businesses that deliver clean energy products, thereby reducing their financial barriers, and stimulating markets so that they can carry on once the project’s incentives cease. As markets change constantly, a dynamic and flexible incentive finding mechanism was used to adjust required incentive levels continuously in line with the competitive market.

In Cambodia, a market aggregation platform was initiated to facilitate business relationships between international ABC manufacturers and local clean energy distributors to aggregate the number of local stove distributors to a critical mass for bulk purchases. The platform replaceed the need for stove manufacturers to build these relationships themselves and reduces their entry risk in a new, unknown market. Through bi-weekly mobile-based stove auctions, local distributors bid for small quantities of stoves with the lot going to the highest bidder. At the same time, a price was guaranteed to the international manufacturer. The difference between auction bid price and guaranteed price is covered by the RBF incentive. The approach was based on the assumption that the local demand for new products will increase over time and leads to the willingness to pay higher prices, which will reduce the RBF incentives in the end.

In Vietnam, the project developed an auction for results-based financing options, which is a unique and innovative concept to define the level of financial incentives and distribute them to producers of leading ABCs. Companies that produce cookstoves fulfilling the project’s criteria were allowed to join the auctions and to bid on incentive options. Through an online platform, producers submitted their bids, and the options were awarded to the lowest bidders – i.e. those who require the least amount of RBF incentives to bring ABCs to end-users. After the stoves are sold, the producers provideed customer data to the project with their smartphone. The project’s implementation partner, the Vietnamese Women’s Union (VWU), verified these household data by phone and through field visits, which served as the basis for incentive payments to producers.

In Lao PDR, a preliminary RBF scheme was introduced that gave incentives to existing artisanal producers of traditional stoves to become engaged in the manufacturing of next-generation clean cookstoves.