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Purpose – Although the crucial role of business, and of business-based approaches, in development is increasingly emphasised by academics and practitioners, we lack insight into the ‘whether and how’ of viable business models, in environmental, social and economical terms. This article analyses private-sector involvement in development, including a business perspective of firm-level factors, taking the case of sustainable energy in developing countries. Design/methodology/approach – In the framework of the international business and development debate, we examine the ‘state of the art’ on sustainable energy and business involvement, and present our own research on illustrative cases from local companies involved in renewable, off-grid rural electrification. Implications are discussed, viewed from the broader perspective of business models. Findings – Existing studies on sustainable energy take macro-economic and/or policy-oriented approaches, containing specific case studies of rural electrification and/or recommended financing/delivery models. We categorize them on two dimensions (levels of subsidies and public/private involvement) and conclude that market-based models operating without subsidies do hardly exist in theory – and also not in practice, as our study shows that companies can at best have part of their portfolio non-subsidized based on customer segmentation or require socially-oriented investors/funders. Research limitations/applications – This exploratory study can be a starting point for further indepth analyses. Practical implications – The article outlines challenges faced by companies/entrepreneurs when aiming for viable business models, and provides insights to policy-makers who want to further the role of business in sustainable (energy) development. Societal implications – Sustainable energy and development are crucial and interlinked issues highly relevant to global society, as exemplified by the UN year of Sustainable Energy for All and Rio+20. Originality/value – The article contributes new dimensions and perspectives that have been left unexplored, and that are crucial for reducing poverty and stimulating sustainable (energy) development.
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1
I
N SEARCH OF VIABLE BUSINESS MODELS FOR DEVELOPMENT
:
S
USTAINABLE ENERGY IN DEVELOPING COUNTRIES
A
NS
K
OLK
&
D
ANIEL VAN DEN
B
UUSE
Corporate Governance: International Journal of Business in Society, forthcoming
ABSTRACT
Purpose – Although the crucial role of business, and of business-based approaches, in development
is increasingly emphasised by academics and practitioners, we lack insight into the ‘whether and
how’ of viable business models, in environmental, social and economical terms. This article analyses
private-sector involvement in development, including a business perspective of firm-level factors,
taking the case of sustainable energy in developing countries.
Design/methodology/approach – In the framework of the international business and development
debate, we examine the ‘state of the art’ on sustainable energy and business involvement, and
present our own research on illustrative cases from local companies involved in renewable, off-grid
rural electrification. Implications are discussed, viewed from the broader perspective of business
models.
Findings – Existing studies on sustainable energy take macro-economic and/or policy-oriented
approaches, containing specific case studies of rural electrification and/or recommended
financing/delivery models. We categorize them on two dimensions (levels of subsidies and
public/private involvement) and conclude that market-based models operating without subsidies do
hardly exist in theory – and also not in practice, as our study shows that companies can at best have
part of their portfolio non-subsidized based on customer segmentation or require socially-oriented
investors/funders.
Research limitations/applications – This exploratory study can be a starting point for further in-
depth analyses.
Practical implications – The article outlines challenges faced by companies/entrepreneurs when
aiming for viable business models, and provides insights to policy-makers who want to further the
role of business in sustainable (energy) development.
Societal implications – Sustainable energy and development are crucial and interlinked issues highly
relevant to global society, as exemplified by the UN year of Sustainable Energy for All and Rio+20.
Originality/value – The article contributes new dimensions and perspectives that have been left
unexplored, and that are crucial for reducing poverty and stimulating sustainable (energy)
development.
Keywords – access to energy; business models; developing countries; electricity; off-grid; poverty;
renewables; rural electrification; sustainable development; sustainable energy
ACKNOWLEDGEMENT
This article is one of the publications resulting from a longer-term research programme on business
and development, and on partnerships. A part of the latter line of research (related to partnerships
for sustainable development) has been carried out together with the Partnerships Resource Centre
(see Kolk and Pinkse, 2010a, 2010b; Van den Buuse et al., 2012).
2
I
N SEARCH OF VIABLE BUSINESS MODELS FOR DEVELOPMENT
:
S
USTAINABLE ENERGY IN DEVELOPING COUNTRIES
A
NS
K
OLK
&
D
ANIEL VAN DEN
B
UUSE
INTRODUCTION
In the past decade, international interest in the role of business in furthering development
has increased, and from a growing number of perspectives. Be it the policy debate in the
framework of the Millennium Development Goals or the literature on bottom of the
pyramid, subsistence markets or partnerships, involvement of the private sector has been
emphasised. As such, attention for economic, entrepreneurial activity in developing
countries, including the impact of foreign investment on development, is not new at all (for
overviews see Fortanier and Kolk, 2007; Meyer, 2004). What has changed in more recent
years is that multinationals in particular are increasingly called upon to help alleviate poverty
(Kolk et al., 2006), and are thus seen as ‘part of the solution’ – no longer as only ‘part of the
problem’. In addition, they are not just asked to contribute to economic development ‘per
se’, but also to address social and environmental issues. In this way, business is expected to
take on roles and responsibilities that were previously regarded as belonging to the domain
of government, and/or of non-governmental organizations (NGOs).
Especially multinationals have become very active in a variety of fields, ranging from
mere philanthropy to more strategic corporate social responsibility efforts, sometimes even
linked to their core business, as can be seen in some business-NGO partnerships or supply-
chain activities (Kolk et al., 2008). Since the early 2000s, attention has even shifted to the
possibility to make a profit out of poverty-oriented approaches, as put forward by the
Bottom/Base of the Pyramid (BOP) thesis as initially launched by Prahalad and Hart in 1999.
While there is no evidence for a systematic ‘Fortune at the BOP’ for multinationals beyond a
limited number of high-profile, oft-cited cases – as the poorest of the poor do not have
sufficient purchasing power to generate huge market opportunities (e.g. Garrette and
Karnani, 2010; Ireland, 2008; Kolk et al., 2010; Pitta et al., 2008) – the BOP idea has put
poverty strongly on the international business agenda. Interestingly, the recent emergence
of BOP 2.0 (Simanis and Hart, 2008), in which the poor stand much more central, as co-
creators of BOP initiatives, has meant a certain convergence with the subsistence
market(place)s approach (Viswanathan et al., 2009; Viswanathan and Sridharan, 2009).
In line with that bottom-up, micro-level perspective, the overall debate has moved
towards the role of smaller, local companies, and to a broader interest in reconciling the
‘social good’ with economic objectives, i.e. beyond corporate social responsibility or
philanthropy only, and in such a way that it can reach sufficient scale to address the urgent
and huge unmet needs of the poor. However, although the crucial role of business, and of
business-based approaches, in development is thus frequently underlined by academics and
practitioners, we lack insight into the ‘whether and how’ of viable business models, in
environmental, social as well as economical terms. Despite generic calls at the macro level
and statements that business can help to alleviate poverty, how this might work from a
business perspective that considers firm-specific factors, is not so clear. This article aims to
contribute by analysing private-sector involvement in development, taking the case of
sustainable energy in developing countries. This is highly relevant as energy is often seen as
a crucial lever for development, as the next section will explain in more detail. We also
3
examine the ‘state of the art’ on sustainable energy and business involvement, and
subsequently present our own research on illustrative cases from local companies involved
in renewable rural electrification. This includes a discussion of implications, viewed from the
broader perspective of business models for development as well.
THE
CRUCIAL
ROLE
OF
ENERGY
IN
DEVELOPMENT
Energy is important for social and economic development, and crucial for individuals and
communities in developing countries to meet their basic needs. The essential role of access
to clean and reliable sources of energy for realizing sustainable development has been
widely recognized, as reflected in the UN’s decision to label 2012 as the international year of
‘Sustainable Energy for All’. It is estimated that almost one fifth of the world population does
not have access to electricity, and this situation is expected to still hold for 1.2 billion people
in 2030 (IEA, 2010). Energy is directly linked to increased income and productivity, and
indirectly to better health, education, quality of life, and human development in general.
Access to energy can act as an incubator of economic activity and have an important impact
on long-term poverty reduction, as it can increase livelihood options by allowing households
to engage in a more diverse range of income-generating activities and make pre-existing
activities more efficient (Biswas et al., 2001; Davis, 1998; Sagar, 2005; Sharma, 2006).
Besides domestic use, electricity can improve healthcare: it enables the possibility of
providing clean water and lighting, of conserving medicines, vaccines, and blood storage, as
well as access to usage of modern medical equipment. In terms of education, learning
conditions could be dramatically improved as electricity means lighting during the evening,
and facilitates access to internet, and thus to knowledge and information beyond the local
community.
Considering that approximately 80% of the people in developing countries who lack
access to electricity live in rural areas beyond the reach of the electricity grid (ARE, 2008),
rural electrification is a crucial issue in access to energy. The conventional approach to
electrification has been to extend the electricity grid powered by centralized fossil fuel-
based power plants operated by the national utility. This is based on the model adopted in
developed countries, where national governments had traditionally created such systems.
The reality in many developing countries, however, is very different, because it is financially,
technologically and organizationally almost impossible to extend the central grid to all
remote and rural parts of the country. Grid-connected electricity is often only available in
urban areas, because of high costs for connection and subsequent power transmission losses
resulting from the large distances that need to be bridged (ARE, 2008). This thus calls for off-
grid, decentralized solutions for energy provision, either based on existing technologies such
as diesel generators or emerging renewable energy technologies (RETs), which provide
access to energy beyond the public electricity grid. A diverse range of such RETs that are
relevant for developing countries has emerged over the years (see Box 1). RETs in fact relate
to two of the three (interlinked) objectives adopted in the framework of Sustainable Energy
for All: i.e. to “ensure universal access to modern energy services” and “double the share of
renewable energy in the global energy mix”.
1
================
Box 1 around here
================
While decentralized RET-based electrification offers clear benefits from an environmental
and social perspective (e.g. by avoiding emissions from fossil fuels and negative health
4
effects from using traditional biomass fuels such as charcoal and wood for cooking and
heating inside), achieving economic viability has been problematic. In addition to challenges
related to financing and upscaling beyond pilot projects, Mohiuddin (2006) mentions that
RETs are not yet widely adopted in developing countries due to a lack of available
infrastructure for RETs, which creates high initial capital costs for RET-based electrification
projects, and limits the possibilities for a wider, sustained market development. The main
challenge is to achieve broad access to affordable, modern energy services in countries that
lack them, and to find a mix of energy sources, technologies, policies and behaviours that
avoid the negative environmental impact related to fossil fuels (Spalding-Fecher, 2005;
Spalding-Fecher et al., 2005).
However, as RETs involve local solutions, frequently for remote communities only,
national governments in developing countries might often not (be able to) play an active role
in their provision at affordable price levels for poor people. This is one of the reasons that
many other (non-)governmental organizations have become engaged in stimulating
investments in off-grid solutions in those parts of the world that would be neglected
otherwise. Through different kinds of partnerships and financing schemes, such
organizations have often tried to attract the interest of the private sector while keeping
costs for electricity users low. However, creating the right kind of incentives to step up
investments in off-grid energy solutions and designing long-term viable business models to
sustain rural electrification has been very difficult for for-profit companies. Academic
research including work by Chesbrough et al. (2006) has also shown that many technologies
developed with the intention to be implemented in developing countries did not achieve
commercial viability, or remained limited to charitable distribution programmes by donor
organizations.
In the next section, we pay attention to financing and delivery models in RET-based
electrification as they have come to the fore in the literature, and compare the options that
have emerged. We subsequently present our own research on some illustrative cases from
local companies involved in RET-based electrification in developing countries, which
represent a market-based bottom-up approach, and characterise the issues at play. Given
that the importance of private sector involvement to establish energy markets in developing
countries for long-term sustainability is increasingly recognised, the viability of the
underlying business models of these initiatives is considered. We also discuss the
implications, viewed from the broader perspective of business models, for both research and
practice in sustainable development.
FINANCING
AND
DELIVERY
MODELS
FOR
RENEWABLE
ENERGY
TECHNOLOGIES
While the importance of access to energy for sustainable development in developing
countries is widely recognized, the issue has not yet received mainstream attention in the
academic business and management literature. Publications have included a range of case
studies, covering sub-Saharan Africa (e.g. Jacobson, 2007; Nygaard, 2009; Wamukonya and
Davis, 2001), South-East Asia (e.g. Byrne et al., 1998; Ling et al., 2002; Miller and Hope,
1999; Nguyen, 2007; Umree and Harries, 2006), Oceania (e.g. Umree et al., 2008, 2009), and
the Indian subcontinent (e.g. Biswas et al., 2001; Chakrabarti and Chakrabarti, 2002; Rao et
al., 2009; Sharma, 2007). However, they have focused on concrete (technical) issues, usually
taking a more macro-economic and/or policy-oriented approach, including the identification
of success factors and the implications for (donor) investment policies in terms of delivery
and financing mechanisms. Research that examines private-sector involvement from a
5
business perspective, including the factors at the level of the firm that influence the viability
of business models for RET-based electrification, has been lacking.
If we consider the existing macro/policy studies, they have predominantly consisted
of two types: empirical papers based on case studies on rural electrification in specific (sets
of) developing countries using RET as an energy source, and policy-oriented papers looking
at the existing policies and financing mechanisms for stimulating investments in RETs and
energy-efficiency technologies. Particularly publications in the latter category, which
sometimes contain insights on emerging delivery models on how sustainable energy projects
are developed and implemented, are potentially interesting for the purpose of this article;
that also applies to financing schemes that address funding mechanisms within a project.
The models and schemes identified by different authors and multistakeholder organizations
such as the Alliance for Rural Electrification (ARE) and Renewable Energy Policy Network for
the 21st Century (REN) overlap in multiple ways, and share important characteristics that we
will briefly summarize next.
Figure 1 positions the various delivery and financing models as included in four main
recent studies, based on two basic dimensions that come to the fore in each decentralized
off-grid solution to access to energy in developing countries: the extent to which subsidies
are included in the model in question, ranging from fully subsidized to non-subsidized, on
the one hand; and the nature of the actors involved, public or private, on the other hand.
While this overview is indicative only (with sometimes dotted lines if there is a range and not
just one point), it gives insight into the different options distinguished, and shows their
variety, as well as similarities. We will not discuss all four studies in detail, but focus on
evolution of thinking over the years, in which the desirability of models carried out by
private actors without subsidies is the most recent phenomenon in a field that has
traditionally relied on donation-based, donor-driven projects.
=================
Figure 1 around here
=================
Based on his study on rural electrification using solar technology in Sub-Saharan Africa,
Nygaard (2009) identifies delivery models that cover the whole range. At one extreme, there
is the traditional philanthropic model (#1 in Figure 1), a ‘donor-driven’ approach in which
developed countries provide funding to developing countries on a project basis, and
government organizations are fully in charge of all aspects related to the RET-based
electrification system. This does not provide a basis for establishing a viable market, and
large organizations such as the World Bank are trying to move beyond this model (e.g.
Martinot, 2001). The other end of the spectrum consists of a commercially-led delivery
model (#2 in Figure 1) based on cash sales, with zero subsidies. This resembles a classic
market-based model in which private organizations and/or individuals are end-users of the
electricity, own and finance the system and are fully responsible for installation and
maintenance – roles all fulfilled by a government organization in the previous model. In
between these two, we find a multi-stakeholder model (#3) in which private entities are still
end-user of the electricity and have ownership over the installation, but financing in is
provided by a donor, financing institution or dealer through a low to medium-size
investment in the overall project. This approach is broad by definition and can involve a
variety of different actors, and is relevant as a possible alternative to the two other models
mentioned earlier. Based on research in Brazil, Cambodia and China, Zerriffi (2011) suggests
comparable models, although his most ‘extreme’ private model (# 13 in Figure 1) is one that
focuses on decentralization which can cover both established (fossil-based) mini-grids and
6
solar systems. While highly interesting for this context, Zerriffi (2011, p. 144) notes that this
has “not been around long enough to have significant impact and allow evaluation of
sustainability and replicability”.
The literature also contains various financing models, as discussed most specifically
by Umree and Harris (2006) and ARE (2008), and included in Figure 1 as well. This again
ranges from donations/subsidies on the one hand (# 8 and #19) and more or less fullly
private funding, such as those based on cash sales (#7), on the other. The latter variant only
works for households wit sufficient purchasing power, which excludes the (poorest of the)
poor (Jacobson, 2007). In this context, micro-financing is sometimes mentioned as a
possibility (#18). While this instrument in general has not been without criticism, a debate
beyond the scope of this article,
2
several authors adjusted it to the energy context to
support both RET supply and demand (Mohiuddin, 2006; O’Brien et al., 2007; Rao et al.,
2009). Rao et al. (2009) most specifically proposed an ‘energy-microfinance framework’ to
pool energy expertise and financial management skills. Figure 1 also contains fee-for-service
models (#4, #5 and #6), in which a national utility or energy service company owns, finances
and maintains the installation, and is responsible for maintenance while periodically
charging a fee to households based on usage. An affordability payment scheme or specific
subsidy can be part of such an arrangement. ARE (2008) distinguishes several models in
which subsidies are integrated, such as a regulated purchase tariff (#14), with subsidies that
complement tariffs paid by consumers, or fund electricity producers either for the number
of connections established (#15) or via power purchase agreements (#17) that guarantee
producers a specific price and a minimum purchase to stimulate investments.
As shown in Figure 1, the number of market-based models that operate without
subsidies is fairly limited, despite persistent calls for private investment for more than a
decade, particularly by international development organizations such as the World Bank.
This has been accompanied by the identification of a range of key demand and supply
factors to be addressed by policies for infrastructure, investments, institutions,
entrepreneurial and consumer behaviour (Martinot, 2001; Miller and Hope, 2000, World
Bank, 2008a, 2008b). However, as noted by Mohiuddin (2006, p. 122), “the majority of
support for RETs in developing countries still comes from local and state governments or
from foreign donors, which is not sustainable because government funds fluctuate as
priorities shift and as national and regional crises spring up from time to time and aid flows
from foreign donors can ebb at times”. A 2012 UN document on Sustainable Energy for All
urges all stakeholders to take steps, and suggests many possibilities for action. It mentions,
“by way of illustration” that “private sector stakeholders could commit to”, inter alia,
“develop and deploy business models that deliver and build value from sustainable energy
solutions” (UN, 2012, p. 14).
Interesting is the unequivocal statement in that same “Framework for Action” (UN,
2012, p. 19) that “In many off-grid situations, small-scale sustainable energy solutions for
productive uses of energy are not only affordable under the right business models, but
cheaper than current sources of energy. This creates opportunities for local business
development consistent with all the objectives of Sustainable Energy for All. There are
numerous recent success stories involving innovation in energy access by small-scale
businesses and CSOs [civil society organizations]. Replicating and scaling up successful
community-based delivery models could have a significant impact, both as stand-alone
efforts and as part of national efforts described in the previous example”. These national
activities comprise joint activities funded by the private, public and non-profit sectors. The
emphasis on collaboration also comes to the fore in the quotation “Private sector
7
stakeholders can make a significant contribution toward achieving the Sustainable Energy for
All objectives, both on their own and – more importantly – through partnerships” (UN, 2012,
p. 14).
It is not clear whether the terms ‘affordability’, ‘cheaper’ and ‘success stories’, as
cited above, refer only to reaching poor populations or also to the economic viability for
business. The request to companies, cited above, to make a commitment to develop
business models suggests that the focus is more on access to energy and the impact for
developing countries. While understandable, this still leaves open the question how and to
what extent RET business models can become viable and thus sustainable in both economic
and social/environmental terms. To shed some light on these aspects, we examined four
illustrative cases of bottom-up business initiatives of local companies. Below first the
methodology and approach will be explained, followed by a presentation of findings,
embedded in a broader discussion of business models.
METHODOLOGY
Sample and method
We analyzed four local companies that have developed innovative business models for
providing RET-based off-grid energy solutions to households and villages living beyond the
reach of the electricity grid. These are illustrative cases originating from four countries in
Asia: Kamworks (Cambodia), Sunlabob (Laos), Husk Power Systems (India) and Grameen
Shakti (Bangladesh). We selected these companies after a web-based search for examples of
entrepreneurial, local activity in RET-based rural electrification in developing countries as
they show different aspects and technologies used in developing countries, and positioned
themselves as market-oriented organizations. Other examples could have been taken, for
example in Africa, although the number of for-profit ventures seems to be smaller in reality
than it looks at first sight as many appear private but turn out to be non-governmental or
hybrid at best. The number of local companies active in RETs appears to be rather limited, at
least when doing a selection via internet sources.
Primary and secondary data was collected from public sources, particularly websites
and reports, supplemented with nine semi-structured interviews with experts in the field,
held by the second author in the first half of 2011, to gain insight into emerging RET business
models in developing countries. Interviewees were three directors of small local companies
(including two of the Asian companies included in this study and one active in Africa), four
senior staff members of international governmental and non-governmental (development)
organizations, and two other experts in the field of energy in developing countries. Based on
insights from the literature, questions focused on main challenges of RETs for access to
energy, the role of the private sector and the emergence of market-based business models,
and the (possible) role of collaboration with partners from the public, private and/or non-
profit sectors in this regard.
Of the four companies, Grameen Shakti is somewhat exceptional in view of its
explicit positioning as a not-for-profit company. Furthermore, it is part of the broader
Grameen family of organizations which contains an umbrella of non-profit and for-profit
ventures, all related to the initial Grameen Bank set up to provide micro-credit. At the same
time, it is a relatively large renewable energy company that has focused on offering RETs in
rural areas for many years already and therefore interesting to consider as well. In addition,
like the other three (Husk Power Systems, Kamwork and Sunlabob), it operates according to
8
a market-oriented approach, and can thus be found in the lower half of Figure 1 as
presented in the previous section. Issues related to levels of subsidization will be discussed
in the next section when we explore their respective business models, in the context of the
literature on this topic.
Business model perspectives
In the past few years, business models have received growing attention in the management
literature,
3
but the number of articles that reckons with the situation in developing countries
has been very limited, except for a few that focus on business-NGO collaboration in this
context (Chesbrough et al., 2006; Dahan et al., 2010) or on opportunities for (Western)
multinationals in emerging markets (e.g. Eyring et al., 2011). Yunus et al. (2010) describe
first-hand experiences with a few Grameen companies from a ‘social business model’
perspective, but this is less linked to the generic literature on the topic and several details
(for example on funding and profitability) are far from clear. We therefore searched for
additional, older publications as well for frameworks that might be helpful to discuss the
type of companies, issues and locations covered in this study, which also included Morris et
al. (2005) and Shafer et al. (2005).
Eyring et al. (2011) turned out to be less applicable in view of its starting point of
competition on either differentiation or price. Given the early stage of the market for RETs
with commercial viability still being explored and companies emerging only recently, the
model appears not so relevant for the purpose. Its components (customer value proposition,
key resources and processes, and profit/cost structure) bear resemblance to other models
though, such as Shafer et al. (2005). The framework of Shafer et al. (2005, p. 202) consists of
strategic choices, value creation, value network and value capture, with several
subcategories, following from their definition of a business model as “a representation of a
firm’s underlying core logic and strategic choices for creating and capturing value within a
value network”. However, the elements are too specific given the nascent state of the
market and the companies, the limited information available for the local companies and
their lack of formalization compared to large (Western) companies.
The most appropriate model for the purpose of this article appears to be Morris et
al.’s (2005) more open set of questions at the foundation level as summarized in Table 1,
coupled with a proprietary level that considers the unique innovation of the specific venture.
We will discuss these aspects in more detail below, using the findings of our research on the
four companies.
=================
Table 1 around here
=================
EMERGING RET BUSINESS MODELS
Table 2 contains some key characteristics of Grameen Shakti (GS), Husk Power Systems
(HPS), Kamworks and Sunlabob, particularly location, main products/services and customers,
relationships, and key achievements as presented by the companies themselves and as
honoured by external parties via awards. It also includes references to the most applicable
delivery/financing models as discussed earlier in this article (see Figure 1). The Table gives
fairly detailed information regarding the activities of the companies, also in terms of
technologies (cf. Box 1) and the specific organizations with which they partner. In our
9
discussion below we will not pay much attention to the technicalities but rather aim to
generate insight into broader implications for sustainable energy and development
considering the (im)possibilities of market-based, private-sector involvement. Components
of Table 1 will be used to characterize the (unique) features of the companies, as well as the
sector more generally. The first subsection addresses the first four questions of Table 1 as
well as the proprietary level, followed by the last two questions to explore the economic
viability and (future) investment models.
=================
Table 2 around here
=================
Offerings, markets, positioning and capabilities
Overall, local companies in off-grid rural electrification offer a portfolio of energy ‘solutions’,
generally consisting of different renewable-energy technologies to various customers:
business-to-business and/or business-to-consumer, in a range from individual-level to
village-level products and services. End-consumers vary in their ability to pay as many are
poor which means that there is often financial support via donor organizations, in which case
these organizations can be argued to resemble, in a sense, a ‘business’ customer (as end-
consumers are beneficiaries). Business-to-business activities are commercial if they cater to
the needs of local companies. It is possible to buy RET-products as a single item, but also in
combination with other products and/or services such as installation, maintenance, training,
project management, and sometimes financing and rental schemes. The local companies
usually do not manufacture RET-products but focus on value-added reselling of standardized
solutions that are customized and locally-adapted where needed so as to ensure a reliable
electricity supply. This is a challenge as it requires a network of maintenance and repair as
well as stable quality products all delivered in distant rural areas. RET-applications are
currently still niche markets, but with a potential to become much larger in view of the large
number of people in developing countries without access to energy.
Within this overall sector framework, the four local companies also exhibit some
differences in terms of size, product-service solutions and customers, as Table 2 shows. All
four are locally-focused in their respective home countries; only Sunlabob has started some
activities on a project basis in other countries as an outflow of their international recognition
and contacts. Husk Power Systems is unique for its cost-effective electricity generation
through a biomass gasifier running on discarded rice husk, abundantly available in rural
India, which is subsequently distributed through a village grid. This is a specific business
model and technology developed by HPS aligned to local conditions. The other three
companies have a broader RET-portfolio, with Grameen Shakti standing out for its much
larger size. Peculiar to GS is that its RET-based solutions come with a micro-financing ‘soft
credit’ scheme developed in collaboration with the Grameen Bank. The company is locally
embedded in Bangladesh through more than 1200 branch offices, which provides a clear
infrastructure.
Although based in two different countries, Kamworks and Sunlabob are rather similar
in many respects, considering their main products/services, types of consumers and the fact
that they are run by an entrepreneur strongly embedded in the local/regional context. One
dissimilarity is Kamworks’ primary orientation at solar energy, which means that it is more
focused in the type of renewable energy than Sunlabob. Different from GS and HPS, which
predominantly cater to low-income (end) consumers only, Kamworks and Sunlabob serve a
10
broader mix of customers, including local business on a fully commercial basis as well as end-
consumers, villages and/or individuals, who pay themselves or are (partly) funded via
international donor projects. This relates directly to the economic factors and types of
investment models of the local companies.
Economic viability and (future) models
Although it proved impossible to obtain hard revenue and profit data from the companies,
our research confirms that building a viable business model in this sector in the present
situation is rather difficult. While circumstances differ and so do the companies we studied,
subsistence appears to be the key current focus, even though the aim is to move towards a
stable income and subsequently growth model. Particularly Husk Power Systems has an
innovative and relatively simple approach, but this requires the abundant availability of husk
material. Even in such unique conditions, however, financing for pilots and start-up costs are
required. This is all the more the case for other locations, where only other RETs can be used
and where rural electrification is not viable on its own as upfront costs for installation,
infrastructure and material as well as operating and service-network costs are difficult to
fund. In the absence of sufficient collateral, banks and investors are generally not willing to
provide loans (at affordable interest rates) to companies in view of long payback periods and
problems with cost recovery in general. End-consumers face the same type of problems, in a
context where poverty reigns and even micro-credit tariffs are too high.
The four companies that we studied are set up and function as private entities, and
strongly advocate market-oriented approaches and entrepreneurship. At the same time,
they generally have a variety of (non-)governmental partners with which they collaborate.
Often these serve to gain, for example, access to subsidies or other types of support from
international organizations to service the real poor and/or start up a business in renewable
off-grid energy. There are differences in the degree to which the local companies rely on
such external sources. Kamworks and Sunlabob have a mixture of self-sustaining commercial
activities alongside subsidized projects based on donor funding. The latter type is focused at
reaching the poorest consumers while commercial activities target business markets or
middle-class consumers. GS explicitly mentions to get “no direct subsidies” but, interestingly,
the company does not aim for profit, perhaps because it is part of the broader Grameen
family of organizations, which has the provision of micro-credit as cornerstone of the overall
business model. So indirect support may be obtained this way or otherwise, but information
about this could not be found. HPS has designed an innovative for-profit model based on
specific local circumstances which has potential to be scaled up. Still, the company has
several socially-oriented investors, including the Shell Foundation.
The variety shows that several models may be needed to address local demands,
adjusted to the specific context. The emergence of market-based approaches generally does
not diminish the role of other (non-)governmental actors as the challenges of ‘sustainable
energy for all’ are tremendous. In the final section, we will draw conclusions and discuss the
implications for the role of business in sustainable development.
DISCUSSION AND CONCLUSIONS
While renewable, off-grid electrification in developing countries offers clear benefits in
environmental and social terms, and is needed in view of the international objective to
realise ‘Sustainable Energy for All’, the economic viability has been a real issue. As a clear
11
illustration of the complexities related to large-scale involvement of business in furthering
development, this article examined sustainable energy, and explored how innovative
market-based models for RET-based rural electrification are emerging as part of a move
away from more traditional, purely donor-funded projects. In line with the importance of the
private sector-based solutions in establishing access to energy in developing countries, as
emphasized by academics and practitioners, the cases of Sunlabob, Husk Power Systems,
Kamworks and Grameen Shakti provided more insight in various business models in rural
electrification. They also show the organizational, financial, regulatory, and technological
challenges, and raise questions as to possible roles that remain or (re-)emerge for
governmental and non-governmental actors.
In comparing these local-level market-based models to international-level donor-
driven approaches, a major strength of the former is the companies’ adaptability to local
conditions as opposed to more generic one-size-fits-all electrification solutions. As these
companies are, almost by nature, embedded in local communities and possess in-depth
knowledge of the distinct characteristics of markets and consumers, they seem better able
to develop context-specific solutions which also creates legitimacy for their approach.
Kamworks in Cambodia and Sunlabob in Laos follow a mixed model with segmentation
based on income levels and energy needs, thereby providing the appropriate technological
solution that suits consumers best. Taking Kamworks as an example, the company
emphasizes its commitment to introducing an energy ladder based on this need- and
income-segmentation, whereby the lowest-income households have the opportunity to
purchase a Moonlight solar-powered lantern (through a rental scheme, which reduces the
upfront costs of buying a Moonlight and makes it more accessible), while those with higher
purchasing power (individuals or companies) can buy somewhat more expensive systems.
Still, there needs to be funding for poor people to be able to get access to energy
either via an arrangement like this or another type of (external) support, with a clear role for
governments, international organizations, NGOs, corporate philanthropy or social venture
capital. Or, as in the case of Grameen Shakti, a reliance on micro-finance ‘soft credit’
schemes for instalment payments for solar home systems that is offered via its relationship
with the Grameen Bank. Sunlabob and Kamworks developed rental schemes in conjunction
with micro-finance institutions and donors. Funding is also necessary for covering upfront
investment and operating costs because it is relatively expensive to set up and maintain a
stable system of electricity provision in remote rural areas – those locations where the true
challenge of ‘sustainable energy for all’ lies. In many places, the situation is comparable to
Cambodia and Laos, with similar issues as those faced by respectively Kamworks and
Sunlabob. Until the moment that local, village-based systems can be connected to a regional
or national grid in collaboration with a domestic utility, costly models will have to be set up
and kept running. Even then, however, the problem may remain that (remote) rural
consumers pay a higher price for electricity than those in traditionally grid-connected urban
areas, which is likely to raise questions about equity (at the national level) at some point.
There may be locations where cheaper solutions are available, as the Indian case
with electricity generation from discarded husk rice shows. Even there, however, funding for
pilots and the start and set-up of the whole system is needed, requiring donors and/or
socially-oriented investors with a longer-term orientation. With declining (relative) costs of
renewable energy (see, for example, the price development of solar panels), possibilities to
undertake more activities for less funding might increase, depending on local weather and
geographical conditions, but a long-run commitment to a specific approach is necessary
given the complexities of operating and building networks of suppliers. These types of
support often run counter to donor approaches of funding for larger-scale one-off projects,
12
competitive ‘bidding’ for grants, or shifting from one location/partner to another to cover
multiple countries, satisfy diverse constituencies or jump on the bandwagon of a successful
venture elsewhere.
There is also the issue, raised by interviewees, that ‘theoretically’ the role of the
private sector is widely accepted, also by international (development) organizations, but that
an understanding of the practical side of how business operates and what it requires to
realise a profitable approach is something different. It is, for example in the case of
sustainable energy, relatively easy to underline the importance of the “right” business
models, but the road to building and then supporting such bottom-up entrepreneurial
activity to sufficient scale is complex and protracted. Large, stand-alone donor programmes
can distort local markets if they do not relate to local companies that need to play a role in
longer-term solutions – especially in the case of rural electrification, small-scale rather than
large business (let alone multinationals) will be actively involved.
These are concerns that are worthwhile to consider in shaping the (future)
involvement of companies in establishing long-term sustainable markets in combination with
support from governments and donor organizations, where applicable. Some issues, such as
renewable, rural off-grid electrification, may need a form of collaboration by public, private
and non-profit actors who subscribe to trajectories that become economically viable in the
longer run or that rely on mixed forms of funding or partnership arrangements. The specifics
may differ depending on local circumstances, as some business models seem to have the
potential for economic viability, provided that there is sustained commitment based on in-
depth, local knowledge of markets, consumers and products/services. Further in-depth
research on the peculiarities and dynamics would be very useful.
Related to the difficulties and limitations of collecting information about local
companies active in remote rural settings, our article contained only a relatively small
number of illustrative cases. While we covered a variety of technologies and approaches,
embedded in a thorough examination of the available literature, follow-up studies that
include more companies and from other countries would be helpful to shed more light on
the topic. For the selection of a sample it should be noted, however, that small
entrepreneurial ventures tend to be little formalized and often rather locally-oriented, and
may thus be less or not visible on the internet, especially if they operate in poor regions
where access is limited. This means that only those (larger ones) that already have
international connections may show up through a web-based search. A second point is that
many initiatives in, for example, sustainable energy, appear to be (predominantly) run by
NGOs or supported by donors to such an extent that one cannot really speak of a private-
sector activity.
Finally, although sustainable energy is a crucial lever for development, research on
other important social and/or environmental issues could generate additional insight, also to
extend our initial exploration in relation to the business model literature. Despite a growing
interest in business models, academic publications hardly reckon with the specificities of
developing countries, as we indicated in our article. As an initial contribution, we discussed
our findings against a generic framework that we deemed most appropriate for the purpose,
but this is something that deserves further careful attention as well.
13
NOTES
1
http://www.sustainableenergyforall.org/about-us.
2
For recent insights into the broader micro-finance debate that often rely on empirical results from
randomized controlled field experiments in the framework of MIT’s Poverty Action Lab, see Banerjee
and Duflo (2010), Chu (2007) and Karlan and Murdoch (2010). For several short practice-oriented
articles on micro-finance, see e.g. Stanford Social Innovation Review, particularly in the 2007 and
2008 volumes.
3
See a special issue with 19 articles on business models in Long Range Planning, Vol. 43 (2010),
which included an introductory reflective piece by Baden-Fuller and Morgan (2010); and Zott et al.’s
overview as published in the 2011 annual review issue of Journal of Management.
14
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17
F
IGURES AND TABLES
Figure 1. Indicative positioning of some off-grid delivery and financing models
18
Box 1. Renewable Energy Technologies (RETs) for developing countries
A broad range of RET-based applications for decentralized off-grid electrification including solar,
wind, hydro and hybrid systems has become available in recent years. For the main applications in
domestic use, such as lighting and usage of electrical appliances (e.g. television, radio, mobile
phones), REN21 (2010) states that the main options include the following: solar home systems (SHS)
applied to individual homes, schools or hospitals; village-scale mini-grids powered by solar, wind or
hybrid technologies; small-scale biomass gasifiers with gas engines; and hydropower installations on
a pico-scale, micro-scale or small-scale. In addition to utilizing solar energy through SHS, ARE (2008)
also mentions two options for solar photovoltaic (PV) which create high flexibility in usage as they
are easy to move and share: small solar PV applications, consisting of solar PV modules attached to a
specific application, and energy boxes, consisting of a portable loading station with power outlets for
creating a connection to specific applications.
When considering appropriate RETs for electrification in developing countries, it is important to
define dimensions on which the choice for a specific energy system can be made, as a broad
spectrum of stand-alone and mini-grid based RET applications has emerged in recent years. Selecting
the best technological configuration for rural electrification from the diverse range of available
options mentioned above should be done on a case-to-case basis, as the specific conditions in a
geographical area determine the most effective technology solution (ARE, 2008). O’Brien et al.
(2007) identify several general characteristics for selecting the appropriate RET-based solution for
electrification, including the efficiency, adaptability, reparability, and ease of use of the technology,
which are rather context-specific and dependent on the needs of the end-consumer. Reliability and
affordability are also often mentioned as crucial aspects (e.g. Umree and Harris, 2006).
Table 1. Six questions that underlie a business model
Question Some subcomponents
How will the firm create value? Peculiarities of the offering
For whom will the firm create
value?
Market factors such as business-to-business or business-to-consumer, local-
international, value-chain position of customer, market segments
What is the firm’s internal source
of competitive advantage?
Internal capability factors including production, sales, technology, finance,
supply chain management, leveraging of networks and resources
How will the firm position itself in
the marketplace?
Competitive strategy factors such as operational excellence, product/service
quality, innovation/cost leadership, customer relationship/experience
How will the firm make money? Economic factors such as pricing and revenue sources, operating leverage,
volumes and margins
What are the entrepreneur’s time,
scope, and size ambitions?
Type of investment model (e.g. subsistence, income, growth, speculation)
Source: Taken from Morris et al. (2005, pp. 729-730).
19
Table 2. Some characteristics of the four local companies included in this article
Grameen Shakti (GS) Husk Power Systems (HSP) Kamworks Sunlabob
Year of creation
1996 2008 2006 2000
Country of origin
Bangladesh India Cambodia Laos
Countries/(sub)
regions of activity
Main market is Bangladesh
Main market is India’s Bihar state Main market is Cambodia Main market is Laos, also international activities
on project basis in Thailand, Cambodia, Uganda,
Sierra Leone, Mozambique, Liberia, and
Afghanistan (some starting from 2012 onwards)
Main products
/technologies (cf.
Box 1)
Solar home systems, improved cooking stoves ,
biogas plants. All include a programme
incorporating credit schemes and microfinance
options
Biomass gasifier running on rice husk,
distributed by village grid
Grid-connected and off-grid solar systems,
water systems (pump), solar home systems
(sizes 20W to 320W), Moonlight solar
lantern, solar-powered cooling
Grid-connected solar systems, village grid systems
(technologies: hybrid, solar, hydro, wind), solar
home systems (sizes 20W to 150W), solar
lanterns, water systems (pump, purification,
treatment, heater), solar-powered cooling
Main services
Installation and maintenance , awareness
raising and demonstration, training programs.
Entrepreneur development through Grameen
Technology Centres, credit schemes
Installation and maintenance, training
programs through Husk Power University
Installation and maintenance, awareness
raising and demonstration, rental scheme on
solar lantern
Installation and maintenance, consultancy on
electrification and energy efficiency, project
management, training programs, awareness
raising and demonstration, rental schemes on
energy systems and solar lanterns
Types of customers
b-to-c, predominantly low-income customers in
rural Bangladesh
b-to-c, predominantly low-income customers
in rural India
B-to-b and b-to-c, broad customer base from
organizations/business to middle- and low-
income customers in rural Cambodia
B-to-b and b-to-c, broad customer base from
organizations/business to middle- and low-
income customers in rural/urban Laos
Key achievements /
statements
(1) “Grameen Shakti has developed one of the
most successful market based programs with a
social objective for popularizing Solar Home
Systems (SHSs) including other renewable
energy technologies to millions of rural
villagers”
(2) Since its inception, Grameen Shakti
achieved a total of 815,528 of installed Solar
Home Systems, a total of 463,842 distributed
ICS, and a total of 22.096 installed Biogas
Plants. It has 1217 branch offices throughout all
64 districts in Bangladesh, with a total of 1445
offices including regional and divisional offices,
with a total of around 5 million beneficiaries
(figures for May 2012).
(3) “GS used its Grameen Bank's experience to
evolve a financial package based of installment
payment which reduced costs and helped it
reach economy of scale”
(1) “The company designs, installs and
operates biomass-based power plants. Each
plant uses proprietary gasification technology
to convert abundant agricultural residue
(procured from local farmers) into electricity,
which is then distributed to rural households
and micro-enterprises through a micro-grid
system - providing a better quality,
cheaper way to meet their need for energy”
(2) “Consumers pre-pay a fixed monthly fee
ranging from US$2 to US$2.50 to light up two
fluorescent lamps and one mobile charging
station. This offers consumers savings of at
least 30% over competing kerosene and
diesel energy sources”
(3) ”Since 2008, HPS has successfully installed
more than 80 plants in Bihar, providing
electricity to over 200,000 people across 300
villages”
(1) “Kamworks tries to introduce the so-
called energy ladder: for the lowest income
household we have the Moonlight (a solar-
powered lantern), and for the medium and
higher income households we have a SHS
systems in 20 watt, 40 watt and 80 watt”
(2) “In the first place Kamworks sells and
installs solar electricity systems for
professional end-users that have a need for
electricity in the rural areas (high-end). In the
second place, the company imports,
develops, produces and sells products based
on solar electricity for the consumer market
(low end)”
(3) ”International experience shows that the
biggest problems with battery operated solar
systems are usually related to the quality of
the product and lack of a functioning local
service network”.
(1) “Sunlabob operates as a profitable, full-service
renewable energy provider, providing
commercially-viable energy services”
(2) “Sunlabob believes that responsible, long-
term oriented entrepreneurship is the driving
force for sustainable economic development and
for providing managerial, technical, and financial
resources needed to meet social and
environmental challenges”
(3) “Sunlabob installed more than 10,000 systems
in over 500 villages and locations in Laos”
(4) “Sunlabob has successfully initiated a rental
service for energy systems and a Solar Lantern
Rental System that allows households and villages
to afford electricity”
20
Grameen Shakti (GS) Husk Power Systems (HSP) Kamworks Sunlabob
Awards
Awards include: SolarWorld Einstein Award
(2010), International Microfinance Award
(2009), Ashden Outstanding Achievement
Award (2008), Energy Globe Award (2008), and
the Ashden Award (2006)
Awards include: Ashden Award for
Sustainable Energy (2011), Africa Enterprise
Challenge Fund Award (2011), and Real
Heroes Award – Social Welfare for founder
Gynesh Pandey
Awards include: Clean Energy Marketplace
Award by USAID, ADB, and RWI (2010),
Development Marketplace Award by the
World Bank (2006)
Awards include: Development Marketplace
Award by the World Bank (2005), Ashden Award
for Sustainable Energy (2007), Energy Globe
Award – Laos (2007 / 2008 / 2009), Cleantech
National Competition in Singapore Award (2010),
and Best Practice in CSR Award (2012)
Size
10.341 employees (7 executive management) 350 employees (6 executive management) Not specified (estimated 15-25 employees) Around 70 employees
Subsidies obtained
States to get ‘no direct subsidies’, focus on
micro-credit financing in collaboration with
Grameen Bank (no mention of subsidies by this
company)
Investments from a number of organizations
including international organizations,
foundations, venture capital firms, and non-
profit venture funds
From international (development )
organizations for supplying and installing
RET-based energy solutions on project-basis,
which includes the World Bank and Energy &
Environmental Partnership Mekong
From international (development) organizations
for supplying and installing RET-based energy
solutions on project-basis, which includes the
World Bank, Asian Development Bank, and United
Nations/UNIDO
Partnerships within
private sector
Not specified Investors include Shell Foundation, Draper
Fisher Jurvetson (DFJ), LGT Venture
Philanthropy, Bamboo Finance (Oasis
Capital), and Cisco
Includes private sector partners for supply of
products (organizations not specified)
Includes private sector partners for supply of
products (21 organizations), projects &
implementation (11 organizations), and business
strategy development (3 organizations)
Partnerships with
governmental
actors
Not specified Includes The Ministry of New and Renewable
Energy (MNRE), Govt. of India and World
Bank/IFC
Includes Agentschap NL (Netherlands) and
GIZ (Germany)
Includes United Nations/UNESCAP, World
Bank/IFC, GIZ (Germany), SES (Germany), Lao
Institute for Renewable Energy (LIRE)
Partnerships with
NGOs
Not specified Includes the Acumen Fund Includes Energy & Environmental Partnership
(EEP) Mekong, PicoSol Cambodia,
CICM/Crédit Mutuel Kampuchea, the Delft
University of Technology (Netherlands), the
University Twente (Netherlands), and Kofi
Annan Business School (Netherlands)
Includes The Asia Foundation, Engineers Without
Borders Australia, FK Norway, Cambodia Rural
Development Team, World Volunteer
Most applicable
model(s) ( Figure 1)
#9, #18 #2, #7, #13 #2, #7, #13 #2, #5, #6, #13
Source: Company websites, reports and interviews
... Corporate Social Responsibility (CSR) is one of the highly discussed concepts in management science [1][2][3], which is justified by the fact that organizations are under the pressure of various interest groups who expect the organization to be socially responsible [4]. The results of research conducted in the area of CSR suggest that implementing CSR assumptions, appreciating the importance of responsibility for the community and the environment [5,6] provide the possibility of sustainable development of enterprises in various sectors [7][8][9][10][11]. ...
... (1) assessing the environmental impact of activities, (2) introducing energy and water-saving activities, (3) developing renewable energy sources, (4) choosing environmentally friendly suppliers, (5) encouraging clients to care for the natural environment, (6) implementing waste and pollution control systems, (7) striving to reduce the environmental impact of energy production/transmission, (8) creating activities that care for the natural environment. ...
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This paper explores relationships among CSR practices in the social, economic and environmental dimensions and digitization in the Polish energy companies. The study used the CATI method, and the data obtained from 110 companies was analyzed using a set of methods starting with correlation analysis, through regression analysis, including backward stepwise regression. Obtained results led to the formulation of SEM (Structural Equitation Modelling) model that has been tested. Results confirm the influence of social CSR practices on practices in economics and environmental CSR dimensions and on the level of digitalization. Research also suggests that there is essentially no significant impact of the size of the enterprise on the level of digitalization, as well as on any of the analyzed types of CSR practices.
... Enterprises therefore combine the sales of high-quality solar technologies with specialized installation and after-sales, and financial services. Through microcredit schemes such as Pay-As-You-Go, relatively expensive high-quality solar technologies can become affordable for at least some segments of the BOP (Casado Caneque & Hart, 2017;Kolk & van den Buuse, 2012;Newcombe & Ackom, 2017;Pai & Hiremath, 2016;Rolffs et al., 2015;Sesan et al., 2013;Yadav et al., 2019). These business models are typically first tested and implemented on a small scale. ...
... For each supplier we collected data about their overall business model and general character (e.g., physical shops, location, origin and firm age, nationality of owner, value proposition, and partnerships with donors, distributors etc.). In order to analyze the business models, we collected information about the value proposition, distribution channels, key activities and complementary services (for installation, maintenance, repair and replacements), partners, and customers segments (Chesbrough, 2006;Kolk & van den Buuse, 2012). For an assessment of quality, data were obtained on both technical measures and quality as perceived by market parties. ...
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Solar technologies promise to provide clean energy to the poorest populations. Motivated by observations of low-quality products in the solar home system market, this study analyzes the role of product quality in the transition to cleaner energy technologies in developing countries. Our systematic empirical analysis of the Ugandan solar home system market reveals several market segments. Plug-and-play and full-service solar home systems offer relatively high quality, whereas component-based mix-and-match systems offer a low-quality, low cost alternative. In addition, we observed a ‘no quality’ product segment with junk and fake products. Our analysis shows that neither high-quality nor low-quality solar products offer a win-win situation if we are to achieve “access to affordable, reliable, sustainable and modern energy for all” (SDG 7). Rather they are complementary as low-quality products may enhance a swift and inclusive transition, whereas high-quality products offer more reliable and higher quality energy access. This observation calls for reconsideration of the current development approaches that focus only high-quality products to achieve the SDG 7 and seeks to protect markets from low-quality products. More interaction between the different market segments is key to realize the promise of solar home systems for low income populations.
... Other issues are reusable sources such as waste, energy community systems and prosumers [54,55]. For developing countries, research is mainly focused on small scale replicable examples [56] and on social entrepreneurship [57]. However, no example has been found about BM applied to the LEAs resulting from the RE and RD interaction. ...
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The paper evaluates the rural development (RD) contribution of local economic activities (LEAs), whether generated or affected by the proximity of renewable energy plants (REPs). The study also informs about LEAs’ role as co-players in the fight against climate change. Semi-structured research interviews have been applied to identify LEAs’ BM (business model) in Andalusia, Murcia, and Catalonia, autonomous communities of Spain. Most LEAs present a BM based on the RE plant, and others do not, but they still contribute to RD, rural communities’ well-being and global sustainability. Results show, first, that certain LEAs, due to their inter-connection with large REPs, can innovate and create a significant number of stable jobs. Second, land leasing to REPs allows for temporary farms’ diversification, which is conditioned to its bargaining power. Third, advice on integration RE projects in RD strategies should be provided. Conclusions suggest the need for new governance to favor energy transition coherent with the Sustainable Development Goals (SDGs)
Chapter
The linkages between sustainable energy development and entrepreneurship are focussed, and studies in this field are critically discussed in this chapter. The new sustainable energy technologies and other innovations are presented, such as solar powered trains, electric tires, liquid sunlight, etc. The role of entrepreneurs in developing new sustainable energy technologies and other innovations in sustainable energy is emphasized. The main barriers and drivers of entrepreneurship and innovations in sustainable energy are scrutinized and grouped in regulatory, economic, informational, technological, etc. barriers based on comprehensive literature review. The policies and measures targeting these barriers are analysed and discussed.
Chapter
Business intelligence (BI) institutionalization has become a growing research area within the information systems (IS) discipline because of the decision-making iteration in businesses. Studies on BI application in improving decision support are not new. However, research on BI institutionalization seems sparse. BI institutionalization may positively contribute to a managerial role in using BI application repetitively for the decision-making iteration in businesses. This article aims to carry out an integrative literature review and report consolidated views of the body of knowledge. The study adopted a qualitative content analysis to generate themes about BI routinization in the decision-making iteration. Eighty-eight research articles were selected for the study. However, 57 articles were finally included for review. The findings suggest information management capability as the key necessity for BI application and its alignment with the organizational standard for BI institutionalization.
Article
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A growing body of research looks into business-led efforts to create social value by improving the socio-economic well-being of Base of the Pyramid (BoP) communities. Research shows that businesses that pursue these strategies—or BoP businesses—face distinct sets of challenges that require unique capabilities. There is, however, limited effort to synthesize current evidence on the mechanisms through which these businesses create social value. We systematically review the literature on BoP businesses, covering 110 studies published in business and management journals. We start by using bibliographic analysis to map the broad contours of the literature in terms of its common theoretical and empirical approaches, intellectual core, and evolution in time. We subsequently conduct a qualitative content analysis on the identified articles to synthesize their main findings. The analysis leads to a conceptual framework that explicates the antecedents, constraints, capabilities, and contingencies that drive social value creation. In addition to providing a rich and systematically organized account of the evidence, our analysis provides a critical reflection on the ethical dilemmas of social value creation efforts for the BoP, and outlines promising avenues for future research.
Chapter
The chronic shortage of petroleum fuels, especially gasoline and LPG, and the prolonged and indiscriminate power outages coupled with the recent increment in fuel prices appear to be taking their toll on Ghanaian businesses; hence, some have questioned the degree of security, reliability, and long-term sustainability of the country's energy need. The chapter assesses the impact of the recent power outages on the growth and profitability of Small and Medium Enterprises (SMEs). The study employed a survey design consisting of structured questionnaires involving a total of 190 SMEs across the country. An eight item Likert scale used to assess the impact of the energy crisis on three key measures of business growth revealed a strong positive correlation between the power outages and reduced profitability but a weak correlation with business expansion by way of market development and a statistically insignificant relationship between the power outages and growth in number of employees.
Article
Among other aims, degrowth calls for a deprioritization of economic growth as primary indicator of success. However, deprioritizing economic growth is challenging because it is the antithesis of business as we know it today. Yet, in this study, we find examples of enterprises operating in the renewable energy industry in the Global South, which deprioritize traditional economic growth as their preferred indicator of success. We interviewed 30 renewable energy enterprises (REEs) on the basis of an importance-performance analysis (IPA). Our findings confirm that conventional measures of financial performance are not universally applicable to all enterprises in the Global South. Specifically, we observed that the REEs that are least satisfied with conventional economic performance indicators possess two characteristics in common: (1) they have strong social motivations (e.g., energy access and poverty alleviation) and (2) they are averse to economic growth in the traditional sense. We draw insights from these REEs for the future of post-growth enterprise, including the importance of localness in success and performance appraisal as the Global South transitions toward degrowth. We also introduce 14 alternative performance indicators, suggested by the REEs themselves, which may help bring enterprises closer to post-growth orientation in the Global South.
Thesis
Living without access to a steady and reliable source of electricity is one form of energy poverty, and living without access to the Internet is one definition of the digital divide. In many rural and remote areas around the world, residents struggle with energy poverty and the digital divide. However, off-grid renewable energy electricity systems are being installed in these areas to provide electricity. Thus, the purpose of this study was to identify management barriers that affect the maintenance of these off-grid systems and the possibility of using them to provide Internet connectivity. This was a qualitative phenomenological study with semi-structured interviews of key informants, who were individuals who had experienced the phenomenon of an off-grid renewable energy system installation. Thematic analysis was used to discover emergent themes. Emergent themes that provided best practices for a successfully maintained off-grid system included adequate and cohesive maintenance procedures, thorough requirements analysis and system design, use of a village-centered model, and robust communication among all key stakeholders throughout the process. Emerging themes identified for successfully using the off-grid system for Internet connectivity included procuring the required technologies, finding a reliable source of Internet signal, recognizing that each site has specific issues concerning connectivity, managing the affordability of Internet-ready devices and technologies and data usage, and having community acceptance and adoption of new technologies. The positive social implications of access to the information on the Internet include economic growth, increased education, and a general improvement in the quality of life for people living in rural and remote areas.
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Climate change is a major concern, and climate change mitigation measures are currently high on the policy agenda. In 2007 the European Union (EU) made decisions both on binding targets to be reached by 2020 for CO2 emissions and for a minimum share of energy consumption produced by renewable energy. Increased access to electricity is a major concern for socio-economic development in developing countries, not least in Sub- Saharan Africa (SSA), where only 8 percent of the population has access to electricity. Using solar photovoltaic (PV) in SSA as a case, this paper explores to what extent the objectives of increased access to electricity in rural areas is compatible with low-carbon technologies. Solar PV systems have been disseminated in SSA for almost 30 years, resulting in more than half a million installations concentrated in a few countries. Despite this apparent success, solar PV has been criticized for being expensive, fragile and limited to non-productive uses. If expectations of future oil prices exceeding twice the level experienced from 1985 to 2003 are confirmed, we may see a more positive attitude emerge, and we might expect solar PV to fulfil an important niche for populations living in dispersed settlements outside the reach of grid electrification. Based on a literature review and the author’s experience in Burkina Faso, the article provides an assessment of various delivery models for individual solar PV systems, and discusses their strengths and weaknesses.
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Market-based solutions to alleviate poverty have become increasingly popular in recent years. Unfortunately, there are very few examples of profitable businesses that market socially useful goods in low-income markets and operate at a large scale. This article examines three case studies of multinational firms that tried to market unquestionably useful products- clean water, eyeglasses, and nutritious yoghurt- to the poor but did not succeed commercially. The article also discusses two positive examples of profitable BOP ventures: mobile phones and detergents. Developing strategies for marketing socially useful goods to the poor, far from triggering a revolution in business thinking, requires firms to get back to the basic principles and rules of economics and business.
Article
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Much effort has been invested in identifYing the important barriers to the widespread take-up of renewable energy systems and in using infonnation to develop best practice guidelines for the implementation of rural renewable energy electrification programs in developing countries. Many renewable electrification programs have been implemented in developing countries of Asia and the Pacific to improve the quality of life of the people living in remote rural areas. Those that have been successful demonstrate that a market for household renewable energy systems can be developed quickly and efficiently given the right combination of institutional, financial and policy instruments. The literature indicates, however, that a number of these programs have met with limited success. Much effort has been invested in attempting to identifY the reasons behind this lack of success. Understanding the reasons behind the limited success of some programs, and for the relatively high success of others, is important as this infonnation can infonn program implementers and improve the success rates of future programs. Most of the research effort to date has focused on the identification of barriers to the widespread take-up of renewable energy systems and this infonnation has been used in the development of best practice guidelines for the implementation of these programs. This narrow focus on barriers, however, does not consider other important factors behind the success of programs. An email survey of those implementing programs in SE Asian and Pacific countries was therefore undertaken with the aim of obtaining the views of program implementers on not only what barriers they see as hindering the uptake, but also on what essential factors they consider need to be included in designing and implementing programs in order ensure program success and the criteria to measure the program success.
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The world today is divided into ‗have‘s and ‗have not‘s. Recently however, businesses have begun to focus on providing market solutions for the world‘s poor. There is now a significant movement in business practice and research toward ‗monetizing‘ these potential ‗markets,‘ as chronicled in the Base of the Pyramid literature (Prahalad, 2005). This article will present an alternative but complementary micro-level perspective of consumers, small business owners or entrepreneurs, and marketplace behaviors. This perspective aims to understand and enable the subsistence marketplaces (Viswanathan and Rosa, 2007) of the world to move toward becoming sustainable marketplaces – a critical goal for business and humanity. Following a brief discussion of the state of the art in business approaches to poverty alleviation, this article will present the rationale for the sustainable marketplaces perspective, outline research, educational, and social initiatives that have emerged from taking this perspective, and discuss implications for businesses that aim to take leadership in poverty alleviation.
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This position paper provides an initial overview of the role of tripartite partnerships for climate change in the broader framework of policy options available to address the issue. First, we will position partnerships in relation to other policy modes for climate change, including emissions trading schemes, voluntary agreements and individual corporate self-regulation. Next, partnerships for climate change are explored empirically, considering two existing databases for their tripartite initiatives and the extent to which they focus on development. Implications, also for further work on tripartite partnerships for climate change and development, will be indicated.
Book
For those in developed nations, suddenly being without electricity is a disaster: power cuts have us fretting over the food stored in the freezer, and even a few hours without lights, televisions, or air conditioning is an ordeal. However, for an estimated 1.6 billion people worldwide, the absence of electricity is their daily experience. An untold number of others live with electricity that is erratic and of poor quality. How can electric power be brought into their lives when the centralized utility models that have evolved in developed nations are not an economically viable option? Poor, rural communities in developing nations cannot simply be 'plugged in' to a grid. Small-scale Distributed Generation (DG), ranging from individual solar home systems to village level grids run off diesel generators, could provide the answer, and this book compares around 20 DG enterprises and projects in Brazil, Cambodia and China, each of which is considered to be a "business model" for distributed rural electrification. While large, centralized power projects often rely on big subsidies, this study shows that privately run and localized solutions can be both self-sustaining and replicable. Its three sections provide a general introduction to the issue of electrification and rural development, set out the details of the case studies and compare the models involved, and discuss the important thematic issues of equity, access to capital and cost-recovery. Hisham Zerriffi shows that in each case, it is not simply a matter of matching a particular technology to a particular need. Numerous institutional factors come into play including the regulatory regime, access to financial services, and government/utility support or opposition to the DG alternative. Despite this, in many countries, the question is not whether DG has a role to play. Rather it is a question of how it will play a role.
Article
The market at the "bottom of the pyramid" represents an important business opportunity, provided that managers understand the challenges of reaching this huge market segment. The difficulties in designing and introducing new products and technologies are generally attributed to the lack of understanding of the local environment in these countries. However, accessing the potential market in the developing world also requires an appropriate business model. Non-governmental organizations are uniquely positioned to develop some of the most innovative and successful business models in the developing world. For-profit organizations would do well to engage with NGOs in order to create effective business models to market technologies in the developing world.
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