New ventures forum addresses challenges to scaling up clean energy access in India
New Ventures India, part of WRI’s center for environmental entrepreneurship, and CDF-IFMR convened a workshop in Mumbai earlier this summer to address the barriers to the clean energy industry serving India’s rural poor. Representatives from every major clean energy company in India joined senior executives from corporations with rural marketing and distribution expertise, representatives from Indian regulatory bodies, and end-user consumer financing experts at the event.
Clean energy products, such as solar cookers, and services, such as renewable energy, have the potential to provide power to India’s rural poor without the negative environmental effects of traditional fuel sources. Tapping into India’s Base of the Pyramid (BoP) market can also create profits for companies providing these clean energy products and services. So why hasn’t this market taken off yet in India?
Attendees discussed major barriers to scaling up clean energy companies such as marketing strategies, consumer financing, and regulatory issues:
1. Attracting the Consumer: Push vs. Pull Marketing Strategies
Participants agreed that many clean energy companies currently adopt a “push” approach, trying to sell their products by telling consumers the product is ‘good for them’ – a strategy that has limitations. “Pull” marketing and distribution strategies, on the other hand, create demand from within the target audience and are essential for clean energy products and services to succeed in rural areas.
2. Getting the Basics Right for Clean Energy Products: Product Quality and Branding
Clean energy products need both to operate as reliably and be viewed by the consumer as being equally reliable as more traditional fuel sources. Participants emphasized brand building as a crucial complement to strong product quality in order to build a positive perception of clean energy industries.
3. Producing Affordable, Accessible Products: Financing and Distribution
Clean energy companies must consider financing and distribution as two separate issues to ensure that both are managed effectively. In India today, many clean energy companies have come to depend on microfinance institutions (MFIs) to provide financing to rural BoP consumers. In the process, many have also shifted the responsibility for distribution to their MFI partners, including technical support and after-sale service, even though MFIs may not be equipped to handle these needs.
4. Growing Clean Energy Companies: The Need for Capital
Clean energy companies still have trouble accessing local debt and investment capital to grow their businesses. Foundation or “angel” investor money could be an important component in creating a supportive “ecosystem” to help entrepreneurs scale their businesses, alongside business development services.
5. Scaling the Model: Regulatory Barriers Remain an Issue for Clean Energy
In recent years, Indian regulators at the federal and state level have introduced a number of programs and incentives to spur clean energy innovation, including feed-in-tariffs and renewable purchase obligations. However, efforts to spur scale-up and incentivize Decentralized Renewable Energy (DRE) systems are still at an early stage, and some participants said that there is still a lack of policy clarity.