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March 02, 2012

Sierra Club India: Helping Social Enterprises Scale Access to Energy

Guest Post By Ajaita Shah, Founder Frontier Markets

FM Solar VendorSantosh, a local daycare worker, mother and wife living in a rural village needs a solar light that can replace her polluting kerosene lantern. She, like half the world's population relies on cooking and lighting practices that kill over 2 million people annually. What Santosh needs is a product solution that can avoid these needless deaths, but the needed education, distribution and sales channels to provide this product do not exist.

Frontier Markets (FM) was created to do solve this problem. What makes us different is after-sales service for energy product distribution. Unlike others, we focus on building service centers to answer questions, educate, fix or replace products. We build a relationship to provide a voice for household demands. On the ground staff are trusted members of the community, not just sales agents who push products. We offer solutions to problems facing the community, providing products that are in demand based on consumer interaction, assessment, and feedback. Our presence gives us access to ongoing data collection to drive product scale in distribution.

However, we face many challenges today. Our greatest competitors are subsidized products, low-quality cheap products, and of course kerosene. In India, and most developing countries, low quality lights and government subsidies skew customer perceptions of quality and market prices. FM aims to be involved in every step of policy, sales and service to ensure customers are educated and supported properly. 

Here are a few things we suggest for helping social enterprises like ours scale and succeed in delivering on the United Nations Sustainable Energy for All Goals:

Create Partnerships with Larger Companies for supply and design: Larger companies in the sector can supply base products in clean energy at a lower cost. We can then use these products to design specific services for our rural households. For example: farmers, dairy, and small retailers are currently using invertors because of unreliable lighting; the inverter is charged through the same unreliable grid. We would like to create a hybrid solution of solar and grid – the inverter is charged through a solar panel with charge controller instead of the grid. This hybrid solution will decrease the use of grid charging by 90%! Let's reduce the price and scale this to rural consumers as an introduction to solar.

Help with Government Linkages: Many government heads and departments are interested in supporting clean energy initiatives, either for their constituents or as an efficient change for their sector. They have introduced tax exemptions for products, have our target market in mind, and can be a great partner in distribution. For example:  ICAR is a part of the agriculture department that trains farmers in technology. We can leverage this to educate them about solar efficiently and scale products for farmers who have provided feedback on their needs.

Funding for Innovation and Scale: Grants help pilot and innovate models and investments help with scale; if companies like ours get access to both, we'd be unstoppable! For example: we have used grants for testing new models, bringing in technology platforms, and testing new product solutions with our households. Through investments, we have built solid infrastructure, a strong team, invested in inventory, and now, will scale.

Information Sharing: Social entrepreneurs share their learnings in very few platforms today; it is important to create more access to operations so we can learn from each other. This can happen through forums, conferences, white papers, and better circulation. Coordinating trips for us to learn from our colleagues in other countries, and other states would allow us to reform our models, and potentially create partnerships for global scale.

There are many efforts to bring clean energy to developing countries today; from manufacturers to distributors, to government initiatives – all trying to work their best to bring reliable and clean lighting to rural poor in developing countries. With more increased efforts on all of our ends, we can light lives together.

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