Innovation and Bureaucracy

Innovation and change can be difficult to achieve in large organisations with well established routines. One avenue to spur innovation for the United Nations (UN) has been to partner with private sector companies that can help them identify how to make efficiency gains in both programmes and operations. In this project, we have established a consortium of the UN (International Organisation for Migration), private sector (Kube Energy) and academia (University of California, Berkeley) with the goal of tailoring a solar servicing model for humanitarian organisations.

One of the major challenges we face is how to work within the bureaucracy of the UN to meet the demands required by investors to raise private capital. The UN has strict procurement policies that regulate the terms it can accept for contracts as well as the processes it must go through to finalise agreements. These regulations are vital to ensure that the UN never ends up in a situation where it is unable to pay its bills (if funding fails), it gets completive prices and to avoid corruption when buying good and services. For traditional products (e.g. vehicles), the procurement policies work well.

However, for non-traditional innovative products and services, the procurement policies are harder to navigate. This has been one of the main obstacles for the UN when transitioning from using diesel generators to renewable energy. The reason for this is twofold. Firstly, the UN does not have the renewable energy expertise that is necessary to issue tender processes. Secondly, the UN has been unable to sign on to contracts that have a duration longer than the period they have secured funding for. The UN typically receives their funding for one year at a time, while the average solar financing contract (e.g. lease) lasts for 20 year.

To get around these challenges, this project has enabled partners implementing this project has been able to dedicate time and resources to carefully weigh the alternatives for a solar service. In practice this means finding the correct share of both technical risk and financial responsibilities. Core question has been clarifying e.g. who has the technical responsibility if extreme weather damages the solar array, or who covers the losses if the UN loses funding one year into the service agreement.

When we designed this project, we were cognisant that this would be a central challenge in implementation. Finding terms that are agreeable to both the UN and the private sector is crucial for the success of the project, as these terms can be replicated to all other UN facilities and thus scale the use of renewable energy in all humanitarian operations globally. One year after we started the work on the project, we are now optimistic that we have found a way through the bureaucracy.