IEEE Power & Energy Magazine - July/August 2014 - 44

figure 1. A family gathering around a solar-powered light
in a rural village in Panama (photo courtesy of Phaesun).

Finding the Right Business Models
Several companies have developed technologies and
business models that have proven profitable for all stakeholders involved, from the technology suppliers to the
operators and consumers. one such case is a project
begun by the rural energy foundation (ref) in 2003. its
objective was to reduce the three main barriers to sustainable renewable energy market growth: lack of availability
of technology, low benefits awareness, and limited affordability to consumers.
With initial financial support from governmental and
private investors, the foundation coached, supported, and
financed local entrepreneurs, their technicians, and salespeople to create a sustainable supply chain of ShSs in
several african countries. it also sponsored large-scale

marketing campaigns and live demonstrations. finally,
to ensure an adequate return on investment, as soon as
demand started to develop the foundation implemented
credit and carbon schemes, thus improving the affordability
of its products. now the foundation has some impressive
numbers to show: it has facilitated access to electricity for
nearly 500,000 people at a cost of less than uS$6 per connection. in the process, 277 retailers were established that
have sold 123,167 ShSs.
in fact, the project was such a success that the ref has
decided to transfer its operations to Solarnow, a social enterprise selling solar products with a hire-purchase (rent-toown) facility (see figure 3). it found that this way it could
offer lower prices due to bulk discounts, supply the huge
demand for rent-to-own systems, and effectively ensure
quality control of materials and services.

Overcoming Financial Barriers
Through Creativity
although this social enterprise managed to gather the
necessary investment to kick-start the project and maintain the distribution systems needed to reach sufficient
scale, these efforts may be too tiresome for most companies. at the moment, such schemes are mostly funded by
social investors, foundations, and visionary venture capital funds. but once that initial bottleneck is overcome,
the sky is the limit.
for this to happen, experts believe that microfinance
institutions will have a major role to play. even then, energy
loans are not smooth sailing. in a household that buys a solar
lamp to save money on kerosene or candles, the investment
takes several months to pay off; to then earn income from
the lamp will require an extra effort and a facilitating environment. for bigger energy projects, such as a photovoltaicdiesel minigrid fueled either by diesel-photovoltaic or pure
renewables able to supply an entire village, the loan needed
is much larger, and such projects require time and effort at
all stages of development and throughout their lifetimes.
as many new market developments have shown in the
past, however, finding an appropriate approach that is relevant to the specific market can overcome barriers. for example, a social enterprise called Microenergy credits decided
to aggregate carbon offsets. by requesting a loan that contributes to offsetting climate change, microentrepreneurs were
afforded that extra push. Similarly, more and more cases of
hybrid minigrids managed by private profitable operators
appear to be successful and sustainable.

Pressing for Fair Regulation
and Taxation

figure 2. A hybrid wind turbine in Ilakaka, a rural village
in Madagascar (photo courtesy of the Wind Factory).
44

ieee power & energy magazine

grassroots movements and creativity may have come a long
way, but certain bottlenecks can only be overcome with the
right political will. this is especially true for issues around
regulation and taxation, as the level of state influence has a
concrete impact on the cost-effective allocation of resources.
july/august 2014

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2014