Business and Development Sector Reports

Energy Business Models for Bottom of Pyramid Markets – 2011 Report

Endeva ( www.endeva.org), an independent institute  has released it’s latest report on energy solutions for low income populations titled Energize the BoP! – Energy Business Model Generator for Low-Income Markets”.

Bottom of pyramid Environmental Innovations

The report is designed to support entrepreneurs and companies in developing sustainable business models that provide clean, reliable, and affordable energy services to low-income markets.

endeva bottom of pyramid

 Download the report on Energy Business Model Generator for Low-Income Markets

at the link below :

Endeva Energize the BoP Energy Business Model Generator 2011-pdf-52-pages-2.8-MB

Why venture into the low income market ?

  • 1.4 billion people around the world lack access to electricity, while 2.7 billion people cook with traditional biomass.
  • This “energy poverty” hinders economic and social development.
  • The 4 billion people living on less than $3,000 per year spend $433 billion per year on energy.
  • Technical solutions providing clean, affordable and reliable energy services to this target group already exist. Leapfrogging is possible.
  • Developing sustainable business models is the key to entering low-income markets.
energy rural markets

Introduction

At least 250 businesses have already been established to provide energy services for consumers at the base of the global income pyramid (or “BoP”). In fact, many more probably exist, as these are simply the documented cases we have found in the course of our “Energize the BoP” research. But if this is true, how is it possible that 1.4 billion people still lack access to electricity? Why have so few of these businesses grown to a larger scale?

The reason, and the impetus for this guide, is that most businesses targeting the BoP do not have a sustainable business model. We see the same mistakes being made over and over again. Too many of these ventures set off to enter the market with rushed, little or even no market research and fail to consider how sales and service processes can support their technology. Too many also fail to consider the kind of human resources needed to grow their business in local contexts. Nevertheless, we absolutely believe in the power of business to energize the BoP. This guide is intended to strengthen this power by supporting entrepreneurs in taking the right steps toward doing sustainable business in the BoP. It is conceived as a business model generator for those addressing the BoP’s energy market in particular. Drawing upon the documented experiences of 250 businesses, 35 of which we have analysed in depth, the generator is divided into four chapters:

  • Business Case presents the rationale for venturing into the low-income market.
  • Customer Interface shows how to interact with low-income customers.
  • Development Process provides advice on starting, implementing and growing a business.
  • Support Directory  collects useful contacts and links.

We are not alone in our passion for enabling energy businesses. As soon as we established this project, researchers and organisations began approaching us, asking to be part of it. Others joined at our request. The long list of acknowledgements impressively illustrates this enthusiasm. We thank every one of these partners for contributing their experience, financial resources and time. The product of these combined efforts is a very practical guide. It is aimed at practitioners who target low-income consumers today, or who plan to move in this direction. The content should prove useful for companies of all sizes and backgrounds, from the start-up to the large utility, from companies offering grid connections or mini-grids to those selling off-grid appliances such as lamps or stoves.

Like any reliable guide, the generator covers the most important factors to consider. However, because the BoP energy market is an emerging market, this guide is necessarily incomplete. As companies continue to innovate and experiment, we continue to learn. We therefore encourage all readers to add to the knowledge presented here by sharing your experiences with us via email. Your narratives will not only be integrated into our training programme, but will help shape the future of energy business at the BoP.

Christina Gradl and Claudia Knobloch

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