Resources for practitioners: inclusive business models in the energy sector

We are delighted to launch a new series of monthly Editorial Specials, in which we highlight our favourite resources on business and development.

As the concept of inclusive business takes root and people move from ideas into action, an increasing number of sector-specific reports on inclusive business models have begun to come out. This month, we focus on the energy sector, where three prominent reports deserve special mention:

• Hystra and Ashoka’s Access to Energy for the BOP (2009)
• Endeva’s Energize the BOP! (2011)
• WBCSD’s Business Solutions to Enable Energy Access for All (2012)

There are a couple hundred pages of good material across these three reports alone. So where should busy energy sector folks look?

All three reports describe the need for access to energy at the base of the pyramid. All three describe business drivers like new markets, the opportunity for innovation, and competitive advantage. And all three examine three primary business models: electricity grid extension, distributed energy systems (which Endeva labels mini-grids and Hystra discusses within the category of rural cooperatives), and off-grid systems and devices such as solar home systems, solar lanterns, and biomass cookstoves. For each business model, common business challenges and success factors are identified. At the same time, all three reports emphasize the need for a broader enabling ecosystem for energy sector inclusive business models to succeed and scale – discussing the regulatory, policy, and financing requirements in varying degrees of detail. A common theme is that collaboration among business, government, civil society, and the donor community is critical.

If you’re a business manager or entrepreneur…

• …working to make the business case, check the Endeva and Hystra reports for general market size and spend figures, and dive into Hystra for a “reality check” on profitability and scalability – including useful bullets on the drivers thereof.
• …trying to anticipate key challenges and solutions along the value chain, Endeva and Hystra provide the most detail.
• …wondering what types and sources of financing are available to start or scale your business, WBCSD’s report provides a useful overview – check out Endeva’s support directory, too.

If you’re a social entrepreneur…

• …looking for business development advice, try Endeva’s guide to the business development process in Chapter 3. There are useful nuggets here even for seasoned business managers – for example, when conducting market research, to remember that “individuals’ preferences and motivations are often tacit. Without relevant alternatives, they never become explicit, even to the individuals themselves.”
• …wondering how you can support access to energy for the communities you work with, try Hystra’s recommendations on for size.

If you’re a government policymaker, bilateral or multilateral donor, be sure to check out WBCSD’s framework for policy action to support private sector provision of energy at the BOP.