Monday
July 22
2013

Sreyamsa Bairiganjan and Sanjoy Sanyal

NexThought Monday – The Last 50 Miles : How Village Level Entrepreneurs are building clean energy networks

“More than the additional income, it is my increased standing across the neighboring villages that keeps me excited about this work every day,” says Daulat Ram. He goes on to add: “Of course the money is important as well, and it helps supplement my agricultural income.”

Ram is one of the 600 odd Village Level Entrepreneurs working for VLE India. He lives in the village of Jhajjar, Haryana, which is just two hours away from the national capital of New Delhi, but the town still struggles with some of the challenges we associate across rural India: Access to power, access to water, and access to health care facilities. Ram saved some money earned from his farming activities and applied to join the VLE India training program to become a village level entrepreneur. VLE India helps Ram and the other VLEs in bringing various products and services such as registration for land records, registration for PAN cards, booking railway tickets, etc. to their local villages. The scope of VLE network extends well beyond the realm of business to consumer services for basic necessities such as lighting services using solar lanterns and solar home systems. Using a VLE network effectively in increasing clean energy access across rural belts is a key to making energy access possible.

The word “entrepreneur” should be understood in the social context of where these individuals operate. Most are small business owners who have decided to be an agent of certain goods and services to augment their income. With income levels ranging anywhere between INR 2000 to INR 10,000, VLEs like Ram have an incentive that also ties in with their ambition to better their living conditions.

New Ventures India, with the support of the Citi Foundation and Shakti Sustainable Energy Foundation, has profiled the leading VLE networks across the country to help develop partnerships with clean energy companies. The networks profiled as a part of the project are ITC- eChoupal/sagar choupal, HUL-Shakti, TERI Lighting a Billion Lives, VLE India, Basix CSC, Sakhi Retail, Villgro Stores, Adharam Energy, Srei Sahaj and Project Dharma. The VLE networks profiled fall into two categories: General Purpose VLE networks (such as those of ITC, HLL, VLE India) which work across several product categories, and clean energy access specialized networks (such as TERI LaBL). Some clean energy access companies, such as Greenlight Planet, have their own proprietary networks. The general purpose VLE networks tends to be larger, but only a few offer clean energy technologies across rural regions

How should clean energy access companies work with VLE networks?

The market potential of promoting clean energy products using a VLE network is significant. Currently around 45 percent of rural households are not electrified in India and more than 85 percent of rural households rely on traditional cooking fuels such as firewood and dung. New Ventures organized three workshops in the November-December of 2012 bringing together executives from the clean energy access companies and VLE networks together. The workshops were held in New Delhi, Mumbai and Bangalore in partnership with WWF India, WRI India and the Indian Institute of Science. Participants discussed strategies that the companies could adopt to help VLEs and VLE networks to promote clean energy products. Some critical strategies as discussed in the workshops included:

  • Identifying and convincing the more enterprising VLEs within a network

One of the key discussion points in the New Delhi workshop was identifying individual entrepreneurs within a VLE network who are keen to promote clean energy products. In general purpose VLE networks, where the focus has been on high volume services (such as railway tickets, land registration) only about 25-30 percent of network agent are specifically focused on product sales. These are the sales workers who need to be convinced to sell clean energy products.

How can companies work around this?

Clean Energy access companies need to work at the VLE Network level to identify areas where they want to focus and specific agents who would help them achieve their targets. VLE networks – whether they are general purpose or specialized clean energy access ones – need to provide senior management time to recruit, train and motivate individual VLEs. The use of technology and services such as that of call center can help in the process. We profiled a company called Artoo, which provides software and management information system for networks.

  • Understanding the clean energy product type

The diversity of clean energy products in the market make it challenging for the VLE networks to identify which are best suited for their sales territories. Solar systems for household use range from lanterns to solar packs; similarly a cookstove can be forced draft or natural draft etc. Networks such as VLE India, Basix and Villgro highlighted this as one of the key challenges.

How can companies work around this?

VLEs need to be trained and product promotional material available to them. The marketing promotion techniques’ used includes demonstration, customer meetings and use of collateral. One key lesson that was underscored multiple times was that the VLE himself/herself should use the product. Companies need to translate technical product specifications into functional benefits in a way that sales agents and their customers understand.

  • Identifying the market for clean energy products

Understanding income and consumption patterns across rural India is critical for VLE networks working with clean energy products. Most of the general purpose VLE networks struggle at identifying the right market to sell a clean energy product.

How can companies work around this?

Census data is available on the sources of lighting at a district level. However, the data needs to be analyzed to a stage, where it can be readily used by clean energy networks. New Ventures is comparing the census data between 2001 and 2011 to identify patterns of un-electrification and increase in income levels so that it can be easily used by the industry. This data can be used with the on the ground experience of VLEs in a given region.

  • Financially packaging the clean energy product/trade finance

Clean energy products are at times priced prohibitively for rural markets. Most of rural India still depends on farming, the disposable income at most points of time during the year is low. There is the additional issue of seasonality of income in rural India. Most of the households have disposable income during harvesting season. This is one of the significant challenges for clean energy companies’ as well.

Individual VLEs often face the additional challenge of stocking energy products. The availability of trade finance will ease the personal burden of some of these VLEs.

How can companies work around this?

There are no easy solutions to this problem, individual banks such as Aryavart Grameen bank, Gurgaon Grameen Bank, Prathma Bank and large nationalized banks such as Canara Bank have provided solar loans to rural consumers. The solar lending category is now a priority sector in India as defined by the Reserve Bank of India. There is a strong argument for industry wide action to help develop standard loan products and umbrella lines of credit for making both end user financing as well as trade finance available.

  • Identifying the after sales network for the product

The VLE networks – having worked for a long time with the rural consumers – bring in brand value and trust of the consumers in their business geographies. Such networks want to be sure that the clean energy product that is a part of their VLE portfolio has a well-established service network that has a quick service turn back time to ensure the credibility of the brand.

How can companies work around this?

Companies will need to own or at least control the product service or maintenance aspect of the business themselves. They can work in tandem with rural BPOs (for call center), regional ITIs and skill development organizations to train technicians. Schneider Electric also has rural electrician training program that companies can leverage.

The tactics we have discussed above can be implemented with more collaboration between clean energy companies and VLE networks. However, the challenges on finance, needs more institutional activity from banks with a rural focus and microfinance institutions.

The need of the hour is to train and support many more enterprising individuals like Daulat Ram who can ensure sustainability of the VLE networks in the longer run to make it work for clean energy access.

You are welcome to be a part of the LinkedIn Group with all the VLE networks and Clean Energy Companies. Click here to join.

Our report has been released and can be read here.

Sreyamsa Bairiganjan is responsible for environmental enterprise evaluation for the New Ventures India program. Sanjoy Sanyal is concurrently the director of New Ventures India.

Categories
Energy, Entrepreneurship
Tags
business development, consumer products, renewable energy