Page 9 - Market Creation for Clean Energy Access - Insights from Jeevika-TERI partnership in Bihar
P. 9
Keeping low paying capacities4 of end users in Second, value added resellers could only sell fixed
mind, these ‘value added resellers’ operated on low configurations of products they sourced and were
profit margins and served only as retail points for the not equipped to customize energy systems to suit
energy products they sold. However, several pitfalls specific household energy needs, making their
emerged in this scenario. First, absence of any after- offerings limited in scope and responsiveness.
sales services due to lack of technical know-how and Third, quality standards ran a high risk of being
absence of a spares-bank to replace malfunctioning compromised as these ‘value added resellers’ often
or damaged products led to distrust in users. This sourced and stocked cheaper equipment that
dwindling confidence in non-conventional energy- allowed them to sell at higher margins.
based solutions meant that users aspired for grid
connectivity even more, ultimately reducing demand In due course, it was realized that in order to
and shrinking the market. introduce market-based solutions in BoP segments,
innovation5 would be the key (Figure 1).This led to
the emergence of social enterprises that provide
decentralized energy services6 to rural communities
(Gurtoo and Lahiti 2012). With a mandate of
designing and developing solutions for ‘BoP’
consumers, these enterprises were funded through
grants, innovation contests, crowd sourcing, and
debt/equity funding.
Most social enterprises were supported by
investors with the intention of generating measurable
social and environmental impacts along with
financial returns. While the initial setting up of this
enterprise was assisted through adequate financial
support, scalability and sustainability remained crucial
challenges. This is because, while the enterprise
had the relevant technological and operational
capabilities, due to the low rate of repayments, the
gestation period of the returns on investment was
so long that it did not allow the enterprise to expand
geographically or increase its consumer base and
product and service portfolios. High attrition rates
also curbed social enterprises from growing out of
their immediate regions.
Therefore, in order to effectively introduce a
market-based approach that supports the provision
of renewable energy products and services for
‘BoP’ communities, creating the market in itself
is a vital step (Simanis 2010). This paper presents
a case to highlight how TERI’s energy enterprise
(EE) based delivery model was synergized with a
unique partnerships to accelerate energy access
by leveraging strength of last mile institutions to
trigger market creation. The paper establishes a
comprehensive outlook into the practitioner’s
approach for market creation and endorses it as
an inevitable step for the sustainability of clean
energy access.
4 Rural communities generally have limited disposable incomes and do not have access to small ticket consumer finance to pay
for first electricity connection or for purchasing electrical equipment.
5 This innovation can be introduced across the energy access market value chain and can be in the forms of technology solution,
delivery and financial model, partnerships, or a mix of two or more forms.
6 The Electricity Act, 2003 of the Government of India triggered emergence of private sector led decentralized energy service
delivery companies in rural areas.
LaBL Publication 9
mind, these ‘value added resellers’ operated on low configurations of products they sourced and were
profit margins and served only as retail points for the not equipped to customize energy systems to suit
energy products they sold. However, several pitfalls specific household energy needs, making their
emerged in this scenario. First, absence of any after- offerings limited in scope and responsiveness.
sales services due to lack of technical know-how and Third, quality standards ran a high risk of being
absence of a spares-bank to replace malfunctioning compromised as these ‘value added resellers’ often
or damaged products led to distrust in users. This sourced and stocked cheaper equipment that
dwindling confidence in non-conventional energy- allowed them to sell at higher margins.
based solutions meant that users aspired for grid
connectivity even more, ultimately reducing demand In due course, it was realized that in order to
and shrinking the market. introduce market-based solutions in BoP segments,
innovation5 would be the key (Figure 1).This led to
the emergence of social enterprises that provide
decentralized energy services6 to rural communities
(Gurtoo and Lahiti 2012). With a mandate of
designing and developing solutions for ‘BoP’
consumers, these enterprises were funded through
grants, innovation contests, crowd sourcing, and
debt/equity funding.
Most social enterprises were supported by
investors with the intention of generating measurable
social and environmental impacts along with
financial returns. While the initial setting up of this
enterprise was assisted through adequate financial
support, scalability and sustainability remained crucial
challenges. This is because, while the enterprise
had the relevant technological and operational
capabilities, due to the low rate of repayments, the
gestation period of the returns on investment was
so long that it did not allow the enterprise to expand
geographically or increase its consumer base and
product and service portfolios. High attrition rates
also curbed social enterprises from growing out of
their immediate regions.
Therefore, in order to effectively introduce a
market-based approach that supports the provision
of renewable energy products and services for
‘BoP’ communities, creating the market in itself
is a vital step (Simanis 2010). This paper presents
a case to highlight how TERI’s energy enterprise
(EE) based delivery model was synergized with a
unique partnerships to accelerate energy access
by leveraging strength of last mile institutions to
trigger market creation. The paper establishes a
comprehensive outlook into the practitioner’s
approach for market creation and endorses it as
an inevitable step for the sustainability of clean
energy access.
4 Rural communities generally have limited disposable incomes and do not have access to small ticket consumer finance to pay
for first electricity connection or for purchasing electrical equipment.
5 This innovation can be introduced across the energy access market value chain and can be in the forms of technology solution,
delivery and financial model, partnerships, or a mix of two or more forms.
6 The Electricity Act, 2003 of the Government of India triggered emergence of private sector led decentralized energy service
delivery companies in rural areas.
LaBL Publication 9
