Frugal Business Model in Energy Sector for Base of Pyramid

Abstract

1.2 billion people around the world lack access to electricity and 2.7 billion people still cook with traditional biomass (IEA, 2015). That “energy poverty” condition hinders economic and social development of the people in the base of the pyramid (BOP) of the world income. Technical solutions providing clean, affordable and reliable energy services to this target group already exist but still need to be improved to perform better. The development of business models to support the technical solutions is the key to entering BOP markets, but those business models to date are not entirely successful due to challenging condition dealing with BOP market, and only a few works of literature discusses specifically business model to support the availability of the modern energy access which is also the goal number seven of United Nation Sustainable Development Goals. The frugal energy innovation (FEI) can be a solution to deal with energy poverty problem, but there are many barriers in implementing the FEI principles, for instance, little number of financial access for the people in the base of the pyramid (BOP) and limited access to distribute the technologies to the BOP areas. This study suggests that in order to implement the FEI principles, a frugal business model can be used by the BOP ventures to provide clean energy access for BOP people in developing countries. Therefore, this graduation project is conducted to analyse the principles of frugal energy innovation in the context of a business model which is applicable for BOP ventures operating in the energy sector. We utilise a business model framework namely business model canvas (BMC) by Osterwalder and Pigneur, which is one of the most well-known business model frameworks. We imply the principles of frugal energy innovation (FEI) and the BOP approach into the BMC to design a Frugal Business Model Canvas (FBMC) framework. The FBMC exhibits the means of applying energy principles to each element within the business model. It encompasses and underlines ancillary components next to the original nine elements of BMC with five additional components that consist of adoption factors, mission value, objective, impact measure and output measure.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 0 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.