From gap to opportunity : business models for scaling up energy access

Abstract

This report breaks new ground by estimating that there is a $37 billion market opportunity for improved energy services at the base of the pyramid. It profiles companies with innovative business models and explores in detail what it takes for them to succeed. More specifically, the report sizes the commercial opportunity for lighting, basic electricity and cooking services, and explores in depth how companies are capturing this potential around the world. With a view to scaling up market-based successes, it offers a series of recommendations for operating firms, social and commercial investors, as well as policy-makers and donors. Three solutions are considered for lighting: (a) solar lanterns, solar kits, and rooftop solar home systems; (b) electricity supplied by mini-grids operated at the community level; and (c) electricity supplied through grid extension from a central utility. The rationale is that the greatest growth and innovation appears to be in these offerings with fairly large numbers of businesses starting to operate at scale. In addition, based on current cash expenditures and from a levelized cost perspective, they are affordable to a sizable portion of those people currently relying on traditional energy. Chapter one, the introduction, discusses energy access as a market and defines ways to further catalyze commercial success stories. Chapter two explores how companies are serving the market, with an in-depth analysis of energy devices, mini-utilities, and grid extension. Chapter three discusses what can be done to help scale-up energy access success stories, with an emphasis on refining business models; rethinking policy and the roles of governments and development partners; and refocusing financing, including a discussion of the opportunities for impact and commercial investors.

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