Scaling Up Clean Energy Access in India Meeting Notes: 15 June 2011New Ventures India , a program of the World Resources Institute (WRI) and the Center for DevelopmentFinance , affiliated to the Institute for Financial Management and Research (IFMR), jointly hosted aworkshop on the “Scaling up of Clean Energy Access in India” in Mumbai on the 15th of June 2011. Theprimary objective of the workshop was to bring together organizations involved in the business ofproviding clean energy products and services to the rural areas of India in partnership with largerorganizations with deep distribution and end consumer financing reach in rural areas. The workshopalso brought together state electricity regulatory authorities in dialog with the organizations.The workshop was a follow up to the WRI New Ventures - CDF report “Power to the People” publishedin September 2010. The report quantified the market size of this industry and also identified specificchallenges that need to be overcome to ensure that the industry reaches full potential. This workshopwas our first step towards addressing these challenges.The workshop was attended by all major companies in the clean energy space for rural India. DistributedRenewable Energy (DRE) companies who attended the workshop included Husk Power Systems, GreenLeaf Energy Private Limited, Harvest Energy, S3IDF, Nature Tech Infrastructure, Mera Gao Micro GridPower, Sun Edison etc). Solar home systems, solar durable companies and energy efficient cookstovecompanies who attended included SELCO, D.Light, Greenlight Planet, Envirofit, Simpa Networks). Seniorexecutives from ITC, Unilever, Hawkins, and Reliance Communications represented large companieswith deep distribution and marketing strengths in rural India. The end-consumer financing experts camefrom Basix, FWWB, Grameen Koota, Adhikaar Microfinance and Arc Finance. The corporate socialcommunity was represented of Citi and Shell Foundation and the policy advocacy representation at theevent was that of Prayas.The workshop was supported by Morgan Stanley and hosted in the board room of Morgan Stanley inMumbai. Dr. P Jayendra Nayak (India Country Head- Morgan Stanley) kicked off the workshop with hisopening remarks and participated in it for its entire duration of six hours.The state regulatory authorities were represented by Mr.V.P. Raja –Chairman (Maharashtra SERC) andMr. Vishvanath Hiremath – Member of the Karnataka Electricity Regulatory Commission.Meeting Notes:The participants at the workshop demonstrated that several technologies were at play in solving theproblem of energy access to rural India. The Distributed Renewable Energy (DRE) companies were usingbiomass gasification as well as small scale solar systems to electrify entire villages. The products in thiscategory also ranged from individual solar lighting products to solar home systems and small biogasplants and improved cookstoves. Innovative business models that were discussed include ‘pay as youlight” models using mobile technology, bundling (such as improved cookstoves with solar lights or cellphones) and franchising.It was generally agreed that the complex problem of providing energy access to rural India wouldrequire the application of multiple technologies and business models. It was constantly highlighted that
Scaling Up Clean Energy Access in India Meeting Notes: 15 June 2011the “one size fits all” approach does not work in India because of the high level of diversity from regionto region.Senior executives from Reliance, Hawkins, ITC and Unilever, all individually with many years of ruralexperience behind them, eloquently made the following points: That products that were to sell in the rural areas would have to have a push and pull marketing and distribution strategy. No single strategy would work in isolation; the companies will have to adopt both at some point of time in their distribution strategy. The products would need to be marketed as an “aspirational” product. The product promotion, packaging and pricing (in other words the product positioning) need to appeal to the emotional needs of customers and not emphasize only the utility value. The product distribution methodology should experiment with multiple methods including direct and network sales, partnering with other organizations, co-branding and OEM partnerships, call centers, rural supermarkets as well as using the existing dealer-distribution chains.Brand building was repeatedly emphasized both in the context of the problem of combating thenegative perception of solar created by inferior but cheap products as well as in the context of theindustry coming together to convey key messages to both consumers as well as other influencers andstakeholders. The other point emphasized was that of strongly emphasizing product quality and aftersales service. The product “cannot be perceived to fail” as the CEO of Hawkins, Subhadip DuttaChoudhury, strongly put it.There was also discussion on whether companies could scale within specific regional geographies orneeded to scale nationwide. The Senior Vice President of Reliance Communications, Peshwa Acharya,drew upon his telecom circle experience to emphasize the large sizes of individual state markets. He wasseconded by Hari Natarajan, representing SELCO. There was no unanimous conclusion, however and itwas obvious that it depended on individual customer segmentation strategy.The discussion on consumer financing and using MFIs as partners was marketed by the generalagreement that using MFIs as distribution partners was not universally feasible. The experiences ofFWWB (recounted by CEO Anshu Bhartia )and Adhikaar Microfinance (described by Mohammed Amin)however recounted individual experiences in Manipur and Orissa which indicated that there could bespecific cases where it could be made to work. One possible area, it was agreed, where existingnetworks could help was dealer financing.And where and how can CSR funds help the enterprises? Anuradha Bhavnani of Shell Foundationarticulated the need for patient funds to help Distributed Renewable Energy companies to scale up toabout a dozen installations and get to the point that they can attract impact funds. Maneesha Chaddhaof Citi Foundation suggested one specific way they could: where the installation was owned by a
Scaling Up Clean Energy Access in India Meeting Notes: 15 June 2011community which received its funding from donors (the installation would be set up and possiblymanaged by the for-profit social enterprise).Few areas of reorganization of the existing policy were highlighted by Ashwin Gambhir from Prayas.They were: simplifying and streamlining the subsidy schemes (as well as consolidating the informationabout state and national level subsidies), integrating the off-grid options represented in the workshop tobe a part of the overall power planning program at both national (but most definitely at) state levels andalso on tax concessions for the industry.So What Next?In the days immediately following the workshop, we ran a survey among the clean energy enterprisesabout what they would found useful and what they would like changed. The responses indicated thatindividual relationships that were struck at the workshop were quite useful and the companies learnt alot from these interactions. In general, it was expressed that more in-depth discussions with expertswould be of value in forthcoming workshops. Everybody reported that the workshop brought uniquevalue addition to their existing knowledge base of the space and would help them take their businessesforward.We expect the clean energy enterprises to reach out to the experts and senior executives and developrelationships/partnerships with them that would add value to individual company operations. As acommunity, however, a few deep dive projects that we suggest for consideration are: Application of professional marketing strategies (from customer segmentation and research to appropriate positioning) to specific products and specific geographies. One or two such pilots run in partnership between participating clean energy companies and experts in marketing and distribution strategies would yield rich marketing data (in before-after scenarios) that could be described in case studies and adopted/adapted by other companies. Similar Pilots could also be run with different distribution strategies to describe the advantages and disadvantages of various channels. The combination of lessons from distribution and marketing could ideally develop into detailed description of recommended “marketing mix” for these product categories. The value of this knowledge in the context of social enterprises cannot be overstated. The documentation of lessons of consumer and dealer financing of energy products also needs to be done. This is particularly important in the context of the scaling up of solar products market in Bangladesh where the combination of solar product vendors (such as but not exclusively GrameenShakti) and IDCOL (wholesale financier) has led to a market size of a million solar home systems (priced at about Rs. 10,000 on the average) per annum. The use of CSR funds to help community ownership of solar, biomass and micro hydro systems that would allow companies to focus on less capital-intensive activities such as implementation and operation services should also be actively explored. An idea broached but not discussed was
Scaling Up Clean Energy Access in India Meeting Notes: 15 June 2011 the aggregation of multiple CSR funds into a domestic impact funds that can be used to seed fund or incubate companies should also be explored. Finally, a broad policy project. This may involve consolidation/clarity about subsidies, integration of decentralized power options into overall power generation targets, public private mechanisms in the energy access area to perhaps even fiscal benefits of companies working in this space.