October 11

Saurabh Lall

Power to the People Part II: Assessing Clean Energy Customers

This blog post is the part of a special series on Clean Energy and the BoP based on the findings of the Centre for Development Finance-World Resources Institute report “Power to the People“, launched in Mumbai on the 28th of September 2010. The first blog of this series can be found here: Power to the People Part 1

The launch announcement of the Global Alliance for Clean Cookstoves generated headlines around the world, calling attention to staggering figures surrounding global cookstove use and its effects. Dirty cookstoves, used by as many as 3 billion people globally, are responsible for the deaths of 1.6 to 1.9 million each year, with women and children most affected.

These are big numbers – and the Global Alliance for Clean Cookstoves has set out to address a big problem. In addition to their effects on health, cookstoves contribute to environmental degradation by releasing soot into the atmosphere and requiring wood for fuel, which adds to deforestation. What these statistics cannot fully encompass is the tangible difference between energy-efficient and traditional cookstoves, and the impact energy-efficient cookstoves can have on the lives of people who use them. Last year, in a small village in the Mymensingh district of Bangladesh, we watched Riya Husain buy a bundle of firewood for 30 Taka (about $0.40) to cook for her family that evening on her brand new energy-efficient cookstove. She had recently purchased the stove from Grameen Shakti, a sister company of the famous microfinance institution Grameen Bank, and the Shakti employees had finished installing the stove a few days ago. The clay, brick and chimney structure looked simple enough, but went a long way in solving a problem that affects millions of rural households every day. Most of Husain’s neighbors used traditional stoves that not only produced harmful indoor smoke and pollutants, but also burned fuel inefficiently, resulting in higher monthly fuel costs for households. Her neighbor, Shazia, for example, complained of regular coughing and irritation in her eyes from cooking daily with a traditional cookstove.

We were traveling in Mymensingh with Roni Islam, a local Grameen Shakti branch manager, trying to understand the reasons for Grameen’s success in selling clean energy solutions like energy-efficient cookstoves and solar home systems to Bangladesh’s rural poor. Our research was to become part of the report Power to the People: Investing in Clean Energy for the Base of the Pyramid in India, which analyzes the significant investment potential for the clean energy industry serving India’s rural poor Base of the Pyramid (BoP). Teams from the New Ventures Program at the World Resources Institute (WRI) and the Centre for Development Finance at the Institute for Financial Management and Research (CDF-IFMR) conducted field research with 15 clean energy companies (11 Indian and 4 international) in India and four other countries: Bangladesh, Brazil, Cambodia, and Kenya. A critical part of our study included examining successful practices from other countries to draw lessons for Indian companies.

After developing structured secondary research about companies providing clean energy products and services for the BoP, we ventured into the field to get a grounded perspective on the whole range of issues in this nascent sector. We identified stakeholders, pin-pointed locations, collected socio-economic and cultural background information in order to make the field research more effective and insightful. The CDF-WRI research team conducted field research among rural BoP consumers and company networks in 26 small towns and villages in India and 8 towns globally. We conducted semi-structured interviews with company officials for a better understanding of the companies’ missions and objectives, and interviews with retailers and distributors to see if the company mission and vision was translated through its supply chain to the people who sell the product in the field. Interviewees included the promoters, executive leadership, middle management, and field level staff, as well as their retail and financial partners.

Fieldwork, while vital for our work to compile an accurate picture of the market from the ground up, was accompanied by a host of challenges. In Bangladesh, we wanted to make sure we spoke to some villagers without the presence of company officials to hear their unbiased opinions on Grameen’s products and services. Unfortunately, we didn’t speak more than a few words of Bangla, the local language, and most people didn’t speak English or Hindi – so we faced a huge communication gap. Fortunately, a local tea stall vendor was a fan of Bollywood films from across the border – and spoke enough Hindi to translate our questions to the local households.

Language barriers weren’t the only challenge we faced in collecting data from the field – our observations often contradicted villagers’ responses about delicate subjects like income, which were crucial to understanding the capacity of local residents to afford new clean energy products like energy efficient cookstoves and solar lanterns. Participants in our pilot Focus Group Discussions (FGDs) and other interviewees claimed to earn approximately 5000 rupees per month. However, this figure was not compatible with what we observed by walking through villages; local homes flaunted television sets, new motorbikes, and disc-players. There was a perplexing missing piece that inhibited us from developing a complete picture of local income within our research. The FGDs were failing to capture something crucial. We needed to spend additional time in the village and use a combination of participatory tools to discover the missing piece.

“Just before the rainy season we collect Tendu leaves and sell it to local middlemen. We get some money from that, but that is not regular… only once a year. We get INR 10,000-15,000 per person,” a villager explained. This piece of information, along with some other feedback, helped us in calculating the average income of the particular village that we were surveying was in fact Rs.18,000-24,000 per month, but highly seasonal. This incident highlighted the importance of getting the right methodology and tools to capture context, and using observation to supplement answers provided by the research participants.

Given India’s cultural and ethnic diversity, which changes every few kilometers across the length and breadth of the country, it was essential to adopt an approach that took into consideration consumers’ behavioral aspects along with the company outreach model in rural locations. Combining qualitative tools with a quantitative approach helped us understand the most significant issues companies in the sector face today. These issues are not limited to companies’ business models, but also relate to the way in which rural Indian consumers interact with these clean energy products. This study’s holistic approach ensures that we have essentially captured ground-level data, to the extent possible, of the sector in a manner that will help investors make informed decisions.

Post contributed by Sreyamsa Bairiganjan (CDF-IFMR), Tracy Elsen (WRI), Saurabh Lall (WRI) and Santosh Singh (CDF-IFMR)