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Delivery Model: Entrepreneurial Model of Energy Service Delivery - The Energy Enterprise

April 2015

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The genesis of the Energy Enterprise (EE) lies in the DFID-TERI Partnership for Clean Energy Access and Improved Policies for Sustainable Development, that was founded on the primary objective of creating a sustainable infrastructure for the delivery of energy services to poor households in India and Africa. Under this partnership, TERI built further on the enterprise- based delivery model that was already in operation as part of its Lighting a Billion Lives© programme, where the provision of basic lighting solutions was being promoted through village level enterprises (VLEs) who held a nominal stake in the capital cost of the intervention and were responsible only to the extent of the operation and maintenance of solar charging stations or micro grids individually assigned to them.

It was however recognized that for energy provisioning to become independent and sustainable, a mid-level enterprise that took care of provisioning, delivery and maintenance and after sales would be a more appropriate entity in creating a market led energy provisioning process. Also, in addition to being a financially viable business opportunity, the enterprise also needed to be socially and culturally sensitive towards the market it was addressing. This formed the ideal backdrop for TERI to create a group of mid-level Energy Enterprises (EEs) that served as agents of last mile delivery for lighting and cooking technologies, after sales services and as catalysts to bring together social and commercial approaches for a viable market environment. The model integrated stakeholders across the energy value chain, identified the nature of their interest (commercial/social) in the provisioning process, and aligned these to create synergies that made the solar solution more relevant and affordable to the end user.

A typical energy enterprise serves a cluster of villages and is owned by rural entrepreneurs willing to invest their time and resources into a service based clean energy business, screened and selected by TERI. Energy Enterprises were formalized as for-profit institutions nationally recognized as "Uttam Urja Shops" and were commissioned in 9 states in India to serve three primary objectives:

1. Sale of clean energy technology
2. Rectification and maintenance of clean technology solutions disseminated by TERI
3. Business development by generating user demand and by initiating partnerships

The IDES therefore concentrates on three key areas to enhance and improve the dissemination and adoption of improved cookstoves:

• Cost: An improved cookstove, at INR 4200, was an expensive commodity to buy at the local market. Even after being heavily subsidized, the cookstove costed INR 2700, where the stove alone was for approximately INR 1000, the solar panel for INR 1200 and the regulator for INR 500. Most end users did not see a value in purchasing such a costly product, that too when an improved cookstove was not even a primary requirement as far as energy needs were concerned. Therefore, the first step in making the product affordable was to replace the steel body with a locally available cheaper alternative - such as cement or mud, drastically reducing material and manufacturing costs.
• Supply Chain: Owing to slow adoption rates of commercially produced improved cookstoves, it was important to create a system that ruled out the large manufacturer and his limited distribution networks and pave the way for local, energy enterprise (EE) level assemblies. All EEs under the Programme underwent skill development trainings, making them self-sufficient and well equipped to produce cookstoves on order at zero risk. This not only made it possible to modify the cookstove based on end user preferences and usage behavior but also allowed flexibility in terms of multiple size options and production volumes.

• Standardization through Integration: A major shortcoming of the improved cookstove were the non-standardized regulator and panel components. By integrating the cookstove into the popular solar home lighting solution, TERI ensured that the cookstove now became a part of a standardized and properly assembled system that accounted for the stove's energy requirement and provided a longer backup as well as reliable clean cooking solution. This also translated into a monetary benefit for the end user, who would now get a clean cooking alternative with their solar home lighting solution at a much cheaper price of INR 600.

The IDES is a first of its kind innovation in the field of clean energy access that brings the clean cooking issue at the same level of attention as clean lighting in a consolidated, responsive and viable format. Since its introduction in July 2014, TERI has successfully disseminated and installed nearly 8000 IDES systems in rural households across Uttar Pradesh, Orissa, Bihar, Madhya Pradesh and Meghalaya.