Access to energy

BipBop Programme

Contents Access to energy

Message from Jean-Pascal Tricoire ....................................................................... 3 The issues at stake .................................................................................................. 4-7 The requirements ................................................................................................... 8-9 The players ........................................................................................................... 10-11 Schneider Electrics commitment ................................................................ 12-19

Schneider Electric | Special Feature: Sustainable Development | N1 - May 2008 | Access to energy May 2010 | Access to energy

Message from Jean-Pascal Tricoire

Promoting access to energy for all, without endangering the climate this is todays major challenge.
We are at a turning point in the history of our planet. Today, both public and private energy is at the very heart of Sustainable Development issues. 1.6 billion people throughout the world do not have access to energy and legitimately aspire to having the same equipment and services as the inhabitants of developed areas. Energy is everywhere, in transport, services, industry, education, health and housing. It irrigates our mature societies. Therefore, access for all to this resource remains one of the essential keys to sustainable economic development that is wellbalanced between mature and emerging countries. But increasing the worlds consumption of energy means endangering another collective resource: the climate. How can we face up to this paradox? How can we produce better, improve our energy efficiency and promote access to energy for all? This is the major challenge facing us today. Schneider Electrics different professions, its world-wide set-up and the exceptional cultural diversity of its teams endow it with a special responsibility in this regard. It is our ambition to become an actor in a virtuous circle that links business, innovation and responsibility. The emerging countries are our markets of tomorrow. Today, imagining an offer suited to people at the base of the pyramid*, means contributing to their development and preparing our common future at the same time. As far as innovation is concerned, it is now more essential than ever that we succeed in inventing new technologies and new services adapted to different realities, capable of reconciling performance and environmental respect. Lastly, the responsibility dimension of our action goes back a very long way. With the Schneider Electric Foundation, we have been involved for many years in educational activities and integration of young people throughout the world. This special feature aims to go even further and introduce you to all the issues related to energy access, and the sustainable solutions we are deploying to face up to them.

Jean-Pascal Tricoire
Chairman of the Management Board and CEO

* The expression base of the pyramid is often used these days to refer to people with the lowest income on a global scale in a given country.

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Access to energy, a challenge for our global village

Schneider Electric | May 2010 | Access to energy

The issues at stake

Access to energy is already an issue for countries in the Southern hemisphere. It is also a real collective challenge closely related to the question of pollution and global warming.
Today, almost a quarter of the worlds population does not have access to electricity, despite all the progress made in certain regions. Certain countries, which have a high proportion of poor, such as China, are capable of supplying the majority of their population with electricity. Others have successfully launched rural electrification programmes, such as Bangladesh where some seventy electrification cooperatives have been created over the last twenty years and which now supply electricity to 40 million people, or Brazil, where new innovative projects have enabled new generators operating on palm oil to be introduced into rural communities. But requirements are still considerable, especially in sub-Saharan Africa and Southern Asia. Furthermore, these requirements are evolving. Today, 4 out of 5 persons without access to electricity live in a rural area, but tomorrow the question will also arise in urban areas. During the next thirty years the major part of the worlds demographic growth will take place in large urban agglomeration in developing countries.

Due simply to their size and their increasing importance in world energy markets, China and India are transforming the worlds energy system. Rapid economic growth will undoubtedly continue to sustain the demand for energy in these two countries and really contribute to improving the quality of life of over 2 billion people. This is a legitimate aspiration that the rest of the world must integrate and support. Nobuo Tanaka, IEA executive director

>60%

This represents the increase in the demand for electricity in developing countries by 2030. Source : IAE 2007.

>47%

This is the amount of CO2 emissions that can be attributed to developing countries by 2030. Source : IAE 2007.

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Energy, the key to development

Since the Rio de Janeiro summit, access to energy has been considered as an essential element for mankinds sustainable development. It is a fact that providing modern energy services (heat for cooking, refrigeration, lighting, etc.) not only enables peoples quality of life to be improved, but it also destroys the circle of poverty by improving the efficiency of health and educational services, by developing mobility and by promoting the development of local crafts, industry and urban services. Access to these services, no matter how modest it may be, has positive direct and indirect consequences, which contribute significantly to development. For example, a communitys or a regions simple ability to pump water by means of electric pumps gives access to drinking water, improves crop yields and increases food supplies. Women and girls can devote the time they used to spend going to and from the well to learning a professional activity. In other words, favouring more equitable access to energy means taking an extra step towards attaining the Millennium Development Goals defined by the United Nations General Assembly in 2000 for solving problems of extreme poverty.

Developing countries should not be condemned by the weight of tradition or their poverty to repeat the same errors as their predecessors, especially when other solutions are available. We cannot refuse them the right to become industrialised and, in fact, they will need to practically double their production of electricity in the coming years if they want to progress and attain Millennium Development Goals. Kofi Annan, at the 14th session of the UNO Sustainable Development Commission in 2006

Schneider Electric | May 2010 | Access to energy Development | N1 - May 2008 | Access to energy Special Feature: Sustainable

The issues at stake

The base of the pyramid, a growth reservoir

The base of the pyramid represents the 4 billion people on our planet who live on less than 2 dollars a day. In his book The Fortune at the base of the pyramid: Eradicating poverty through profit, C.K. Prahalad, a university professor and influential international consultant, proposes that this population is not considered as a burden but as an immense potential reservoir of consumers and entrepreneurs. And to meet the requirements of this target, he suggests t hat major companies should work hand-in-hand with Non-Governmental Organisations and local government authorities.

Rapidly increasing requirements

The other major issue for the coming years is that of the sudden increase in requirements. According to a scenario drawn up by the International Energy Agency (IEA) in the report it published in early November 2007 (World Energy Outlook 2007), developing countries with the fastest economic and demographic growth should account for 74% of the increase in the worlds primary energy consumption, 45% of which will be attributable to China and India. As a result, the IEA is urging all countries to undergo a transition, whose goal is to decarbonise energy in order to reduce CO2 emissions and to preserve the planet from the disastrous consequences of global warming. Therefore, a new balance must be found between goals that are often contradictory: human development, economic growth and environmental respect. Without any doubt, this will involve a profound and virtuous modification of the living pattern of the people who inhabit the Northern hemisphere and a search for alternative energy production solutions in the Southern countries.

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Today, 1.6 billion persons throughout the world, or 300 million families, do not have access to electricity.
World map with captions showing the regions where requirements are greatest.
Source : International Energy Agency, 2006.

2002

2030

Africa
Less than 10% of the population living in West Africa has access to electricity. In rural and peri-urban areas, electricity connection rates rarely exceed 5% compared with 35% in North Africa and 45% in Eastern Asia. > In sub-Saharan Africa, 526 million people do not have access to electricity.

Schneider Electric | Special Feature: Sustainable Development | N1 - May 2008 | Access to energy May 2010 | Access to energy

The requirements

Asia
Primary energy requirements in Asia should increase by 8% to 10% over the first 30 years of the 21st century. In 2004, the continent already represented 62% of the worlds growth in energy consumption (source: Enerdata). > Almost 900 million people still do not have access to electricity, particularly in South-East Asia.

>$15

This the average monthly energy budget for the poorest families, which represent 30% of their overall income.

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The players
In every area of the world, there are programmes, non-governmental organisations and private companies endeavouring to promote access to energy.

Non-governmental Organisations
A certain number of NGOs are working, more or less exclusively, on questions related to energy. Electriciens Sans Frontires was created in 1986 by employees in the Design and Research Department of EDF (Electricit de France). Today, this NGO has federated a dozen regional associations with over 800 voluntary workers, mostly from EDF. Over 20 years, more than a million people have benefitted from the associations actions. The E8 was created just after the Rio summit in 1992. This NGO has united 9 of the largest electricity concerns in the G8 countries. Since 1992, together with UN experts and local partners, it has completed five projects and is at present developing several programmes on renewable energy in the poorest areas in the world. Another example: the Habitat for Humanity NGO, which works on housing for the most poverty-stricken, is integrating notions of energy efficiency in its programmes and is developing solutions based on renewable energy in certain countries, such as Armenia, where it has equipped homes belonging to poor families with solar water heaters.

Schneider Electric | May 2010 | Access to energy Development | N1 - May 2008 | Access to energy Special Feature: Sustainable

The players

International institutions
For a number of years, numerous international programmes have been endeavouring to reduce the worlds energy divide. With the support of 24 European, American and Asian countries, the African Development Bank (ADB) works in 53 African countries. Notably, it has launched the Finesse programme (Financing Energy Services for Small-Scale Energy Users) intended to promote deployment of renewable-energy-based services in Africa. The objective of the World Banks ESMAP programme (Energy Sector Management Assistance Program), managed in partnership with the United Nations Development Programme, is to increase peoples access to modern energy sources, especially in isolated rural areas. The EUEI, the European Union Energy Initiative for the eradication of poverty and sustainable development, was launched in 2002 at the Earth Summit and obtained a joint commitment from the member states and the commission. Lastly, the United Nations Environmental Programme REED Rural Energy Enterprise Development acts as an incubator for enterprises and as a business angel. It supplies funds to companies in the form of a debt or shares, enhances the value of the most profitable projects and withdraws once the company has become viable. It also acts as an advisor by making qualified personnel available to entrepreneurs.

Private companies
In the context of their social responsibilities, certain large companies in the energy sector also endeavour to promote access to energy for people living in developing countries. A member of the E8, EDF is participating in several projects piloted by the E8 NGO throughout the world. Its EDF Access programme is a long term programme for creating and running local companies for selling energy services to rural populations in developing countries, far away from power grids. In 2003, in partnership with the WWF, ABB launched an access to electricity in Tanzania programme, whose aim is to equip rural villages with installations that run on biomass fuel. In India, General Electric is deploying a rural electrification programme that incorporates a certain number of technologies from the GE renewable energy portfolio. This year, the American giant has set up a partnership with USAID and has committed itself to giving support to two initiatives made by the Indian government: Electricity for all by 2012 and Rural electrification / Rural business clusters.

For more
www.iea.org www.ademe.fr www.un.org/french/millenniumgoals/ www.ckprahalad.com www.electriciens-sans-frontieres.org www.e8.org www.habitat.org www.afdb.org www.esmap.org www.areed.org www.panda.org

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Schneider Electrics commitment

The "BipBop*" programme
Business Innovation

Partner with investment funds to create companies dedicated to the electrical business for the Base of the Pyramid.

BOP

Build adequate offers/solutions to be a champion in the electrical distribution field fot the Base of the Pyramid.

P
People
Train young people from the Base of the Pyramid in electrical skills, sponsor them.

Support from Schneider Electric Foundation

BOP for Base of the pyramid. It is the expression commonly used to name those with the lowest income in each country.
* BipBop is the name of an internal Schneider Electric programme.

Schneider Electric | May 2010 | Access to energy

Schneider Electrics commitment

For many years, Schneider Electric has been committed to a sustainable development approach. Today, the Group is passing a new milestone by linking business, responsibility and innovation even more closely together.
By incorporating Sustainable Development objectives and indicators in its successive company programme, Schneider Electric had already placed Sustainable Development at the heart of its strategy. But today, we are going even further, explains Gilles Vermot Desroches, Sustainable Development Senior VP, Schneider Electric, by treating three problems, Business, Innovation and People at the base of the pyramid, in an integrated way, in other words, by creating an offer adapted to the requirements of populations at the base of the pyramid (the innovation dimension), by investing in innovative companies (the business dimension) and by increasing the levels of qualification of base of the pyramid populations (the people dimension). In this approach, increasing populations technical skills enables us to find better qualified labour, to improve servicing and maintenance and to distribute offers for the base of the pyramid market more rapidly. Also, acquiring administration and management skills enables us to minimise financial risks, to optimise company strategy and to increase return-on-investment levels (which can then be reinvested elsewhere and thereby accelerate the access to energy process). Improving the quality of an offer (and its appropriateness to the demand) enables us to generate the resources needed to finance a training programme and to train populations on an offer that is suited to them (easy to use, to service, to exploit, etc). Lastly, investment in innovative companies stimulates the emergence of new ideas and offers that are increasingly accessible, approachable, and viable for the base of the pyramid.

Virtuous dynamics
Associating these three dimensions together means creating virtuous dynamics.

>Over $430 billion

Per year, this is the estimated size of the household energy market in the base of pyramid consumer segment, where annual income is less than 3,000 dollars.
Source: International Finance Corporation, The next 4 billion, market size and business strategy at the base of the pyramid, World Resources Institute, 2007.

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Innovation
Low-income markets, pretty unattractive? Taking an interest in it today means preparing for the future.

Prepayment, a solution suited to the requirements of developing countries

Today, the Groups offer in terms of access to energy is mainly borne by Conlog, it subsidiary set up in South Africa, a company that joined the Group in 2000. In many emerging countries, electricity operators have difficulty in managing payment of their invoices. Conlogs prepayment solutions (installing counters in homes, setting up a network of prepayment card sales points and a management system on the energy operators premises) provide an efficient solution to this problem. There are numerous advantages to this system: the operator obtains significant cash flow and can save the cost of a traditional invoice management system. On the consumer side, access to energy is simplified, without any extra cost for subscriptions or cancelling subscriptions, and managing energy budgets becomes easier: you only consume what you can pay for. In the Sudan, Conlog has installed a million counters of this type for the national

electricity operator. In South Africa, the same number of counters has been installed for Eskom, a local electricity production and distribution company.

The low cost housing market

The offer developed by Schneider Electric in South Africa follows the same logic. Since 1994, with the A home for all government programme, 1.4 million low-cost homes have been built, putting a roof over the heads of some 5 million people, amongst the poorest in the country. Schneider Electric has set up a partnership with a local company, Sonoco, created by the former South-African football star, Jomo Sono, for equipping these homes whose technical characteristics are all very similar. Sonoco installs kits which include everything required by a basic household electricity installation; it sells prepayment cards to the occupants, operates prepayment services and handles system maintenance. The kits developed by Schneider Electric are very easy to fit (one hours fitting on average), which also provides a solution to the problem of local installers technical skills.

>1
million: households at the Base of the Pyramid have access to energy thanks to Schneider Electrics solutions at the end of 2011

Schneider Electric | May 2010 | Access to energy

Schneider Electrics commitment

In-Diya LED-based lighting system in India

As part of its commitment towards the BipBop initiative, Schneider Electric unveiled its In-Diya LEDbased lighting system in New Delhi in February 2010. In-Diya aims to provide lighting to people living with no or unreliable electricity in India. It is a specially designed LED-based lighting system that can operate on main supply and/or solar, and provides backup ranging from 8 to 15 hours for indoor applications. The innovative offer will play a key role in providing access to reliable lighting to more than 500 million rural people, thereby enabling them to take part in the exclusive growth story in India. In-Diya is a high-quality, affordable product offering the following benefits: > consumes 50% less power than an 11-watt compact fluorescent lamp (CFL) and 90% less power than two 60-watt incandescent lamps for the same light output > illuminates a 3.65m x 3.65m (12 x 12) room for all normal activities and is wall-mounted > in its high-end version, costs less than any CFL-based solar home lighting system > provides 50 000 hours of lighting

Half of the net profit earned from the sales of In-Diya in India will be put back into the Schneider Electric India Foundation to further the cause of BipBop. Also in India, the Schneider Electric Foundation contributed to project iLead (Institute for Livelihood, Educations, and Development). The project consists of skill development, training, and employment for disadvantaged young people, as well as entrepreneurship training for poor youth. A pilot class of electricians started training in 2009. The goal is to train 4000 professionals in six different locations by 2012, after which they will be encouraged to launch their own small business and deploy lighting solutions in poor villages throughout the country .

LED lamp with battery backup

The innovative offer will play a key role in providing access to reliable lighting to more than 500 million people.
Abhimanyu Sahu, Programme Manager, BipBop India, Schneider Electric

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Business
Schneider Electric Energy Access Fund
The establishment of the Schneider Electric Energy Access fund marked an innovative first for a major industrial company in the area of corporate social responsibility. Created with the backing of Crdit Coopratif and PhiTrust, the fund supports the development of entrepreneurial initiatives worldwide that will help the poorest among us obtain access to energy. With an initial capitalization of 3 million, Schneider Electric Energy Access provides financing for projects that are designed to: > help jobless individuals create businesses in electricity > promote the development of businesses that provide energy access in rural orsuburban areas > support the deployment of innovative energy access solutions that use renewable energies for the Base of the Pyramid Schneider Electric Energy Access fund works within the companys BipBop Programme to provide safe, green energy to disadvantaged individuals. The structure of the fund, which is designed to promote responsible development, represents anoriginal and innovative response to the latest French legislation on employee savings. It is a new societal commitment for Schneider Electric, shared with our entire corporate community. By supporting the development of businesses involved in electricity and renewable energies, Schneider Electric Energy Access reflects our commitment to creating a virtuous circle combining business, innovation, and social responsibility.

May 2010 | Access to energy Schneider Electric | Special Feature: Sustainable Development | N1 - May 2008 | Access to energy

Schneider Electrics commitment

People
The Schneider Electric Foundation supports projects all over the world to promote access to energy and professional integration into electrical trades.

In India, from village to school

In India, Schneider Electric is involved in a project with the Kanyare Colony, a village located in the province of Kernataka. The projects initial objective is to provide electricity to the village, which is the home of 150 families mainly earning their living by gathering fruit and vegetables and producing honey. The projects second phase consists of training 20 young people in electrical trades; a training programme that will be extended to a technical college located at Misore, the closest town.

Over the past 10 years, the Schneider Electric Foundation has supported hundreds of children and young people in all of the Groups host countries. The most ambitious projects combine financial and human resources with a link to Schneider Electrics businesses.

Jobs in electricity
The Group has decided to focus more fully on jobs in electricity to give its commitment more meaning and make its programs more effective. Around the world, wherever disconnected people are looking for job opportunities, the Foundation will support projects that provide training and an on-ramp to long-term employment, especially in areas related to electricity.

Access to energy
In todays world, 1.6 billion people do not have access to electricity. The Foundation wants to help shrink this gap by providing access to energya move that will also provide access to development and improved healthcare.

>10.000

young people at the Base of the Pyramid trained in the electricity professions at the end of 2011

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The Foundation in action

Training future electricians in Brazil
In Brazil, the national industrial training service (SENAI) is deploying an 80-hour training programme in close cooperation with Schneider Electric Brazil. Taught on nights and weekends, this initiation to the basics of residential electrical work gives low-income youths an opportunity to learn the electrical trade. Because the courses are offered free of charge and outside working hours, both attendance and the completion rate are high. In 2009, 1200 young people participated in the programme at 26 centres across the country.

Hands-on experience in Nigeria

From December 3-7, 2007, students at Yaba college of technology applied the electrical engineering lessons given by Schneider Electric team members in a hands-on workshop. Participants were asked to verify and optimize the electrical installations at Child Life Line, a centre for the disadvantaged supported by Schneider Electric Nigeria, its employees and the Foundation. Afterwards, a training session on installation was offered that attracted nearly 400 students and 70 professors from four Nigerian universities.

May 2010 | Access to energy Schneider Electric | Special Feature: Sustainable Development | N1 - May 2008 | Access to energy

Schneider Electrics commitment

Around the world

> Algeria Atelier sans frontires
Train disadvantaged young people to acquire the basic knowledge in electricity and electronics.

> Brazil Sociedade Benfeitora Jaguar

Build a new classroom, renovate another one, propose on-product training for the teachers a nd train 60 young disadvantaged people a year in electrical engineering.

> Costa Rica Fundacin Cedes don Bosco

Train 38 young disadvantaged people and their teachers in electromechanical engineering, bringing brand new electrical equipment.

> Egypt Galal Fahmi School

Renovating a technical school, training the teachers and developing a training program for the pupils.

> France Adie

Providing financial assistance to 50 long-term unemployed persons to help them create their own companies in the field of electricity.

> Indonesia 2 Vocational schools et Nurani Dunia

Renovate and equip the laboratories at the technical schools in Banda Aceh.

> Lebanon Seeds of Hope

Partnering with the European Institute for Cooperation and Development (IECD) to upgrade training capacity at six technical schools specialized in electrical, electronic and electromechanical studies.

> Central Africa The Feron Vrau foundation

Giving social and financial support for the training of engineers and technicians (recruiting and training teaching staff, purchasing technical, scientific and classroom equipment).

> Russia University for Handicapped people

Create a University for handicapped people, with courses, selection and exams and delivery of a Schneider Electric diploma.

> Turkey Cagdas Yasami Destekleme Dernegi

Provide financial support for 50 young women to enable them to continue their studies in electrical and electronic engineering.

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Schneider Electric | Special Feature: Sustainable Development | N1 - May 2008 | Access to energy

Schneider Electric SA Sustainable Development Department 35, rue Joseph Monier 92506 Rueil-Malmaison - France Tl : +33 (0) 1 41 29 70 00 Fax : +33 (0) 1 41 29 71 00

Butterfly - Crdits photos : Agence VU, Etienne Eymard Duvernay, Christian Rausch, Schneider Electric.