NextThought Monday: Barefoot Power looks to reduce the cost of living off-grid in India
Over 1.5 billion people globally – 400 million of whom are in low-income markets across India – lack access to clean and reliable energy because of limited connectivity to electricity grids.
For those families living at the bottom of the economic pyramid – typically on less than $5.50 USD per day – the most common methods of energy are fossil fuels such as kerosene, coal, and diesel generator-sets. Additionally, for many low-income people today, mobile phones represent an important connection to markets and other income-generating opportunities.
However, traditional kerosene options are both harmful and expensive. They have been repeatedly proven to be the primary cause of indoor air pollution, which leads to an increased likelihood of burns and cancer. Moreover, due to limited connectivity to an electric grid, families are forced to walk miles daily for electric access to charge much-needed phones and batteries.
Recognizing these challenges, Barefoot Power, a growing venture based in Australia, aims to address India’s growing energy issue at the source by leveraging solar power.
Founded in 2005, Barefoot Power has created affordable lighting and phone charging products tailored for low-income markets – including 20 developing countries across Africa, America and, more recently, China. My company, Ennovent, which accelerates innovations for sustainability in low-income markets, invested in Barefoot Power in 2011 to assist with the organization’s expansion into India.
Market opportunity and challenges
With approximately 75–80 million Indian households off the grid and less than 5 percent market penetration by existing providers, there is significant business potential for home products powered by solar energy. Even with conservative estimated average revenue of 200 rupees a month per household, the market opportunity is approximately $4 billion USD in India.
However, even for an organization like Barefoot Power, whose business model has been successfully scaled in low-income markets across Africa, expanding into India has presented a unique set of challenges.
When establishing operations in early 2012, Barefoot Power dealt with issues such as high custom duties, lack of consumer awareness about solar energy home products and long conversion times while working with the government to receive certification for various products. Additionally, with each Indian state being almost the size of a European country and equally diverse in culture and language, catering to multiple states simultaneously has proven complex. To realize success, multiple distribution strategies and customization levels have been required.
(Above: Villagers test solar light).
A two-pronged distribution approach
To ensure that Barefoot Power can rapidly expand within the focus states of Karnataka, Tamil Nadu, Gujarat, Bihar and Uttar Pradesh by mid-2013 and make safe and affordable energy options more accessible, the company is focused on a two-pronged distribution approach.
Firstly, Barefoot Power is forming partnerships with rural distribution companies as well as various non-profits, community groups, and faith-based organizations to achieve distribution of their products at a grassroots level.
Being a young and versatile company themselves and only just establishing operations in India, Barefoot Power also believes in the potential of micro-entrepreneurs.
“Across these states, the company will also partner with several micro-entrepreneurs based in rural villages and small towns,” said Vernie Sannoo, Managing Director of Barefoot Power, India. “We envision empowering thousands of entrepreneurs by training them in product demonstration, sale and service of our entire range of products so that together we can faster reduce the impact of energy poverty in India.”
Scaling up in India
Simply refining distribution strategies, however, is not enough to effectively scale in India; customization and adaptation of both products and financial models is required.
For example, Sannoo said that in India, Barefoot Power will introduce brighter 1.5W lights to cater to local demand. The company also is creating an entirely new series called Barefoot Connect with advanced microprocessor-based technology and superior aesthetics that will have longer run times and the ability to power devices such as radios, fans and televisions.
Keeping in mind that developing communities in India have limited resources for what can be seen as capital expenditures, Barefoot Power also will be providing various financing options. By partnering with various district corporate banks, micro-finance organizations such as Margdarshak and ESAF India, and leading private-sector corporate banks, Barefoot Power will enable individuals to pay off the Barefoot Firefly Mobile light, for example, in as little as three months and begin saving for other necessities.
India as a market represents both substantial opportunities as well as challenges. Barefoot Power has taken meaningful strides in adapting its business model and value proposition to effectively scale in India.
Through Barefoot Power’s expansion in India, more homes in India will gain access to a cleaner and more efficient source of power. More importantly, micro-entrepreneurs in villages will be able to extend shop hours and generate additional income, while more children will be able to do their homework at night, thereby considerably improving their education opportunities.
Ennovent offers access to a wide range of sector and market experts to effectively scale ventures for low-income markets and accelerate the impact of their innovations. Learn more.