Photo courtesy of SolarAid
How to make solar power the new Coke
by Mariana Mazon
Mariana Mazon explains how the challenges of distributing energy products out to remote rural areas can be overcome - to the benefit of both people and the environment.....
On a recent trip to Kampala in Uganda I couldn’t help noticing that although there was barely a paved road in sight, the one thing you do see on every corner is a small shop selling cans of Coca Cola.
If the biggest corporates in the world have the power to get their fizzy drinks to the poor, surely it can’t be so hard to do the same with far more beneficial products, like solar lanterns or cleaner cookstoves?
Despite the huge progress that’s been made in recent years in developing clean energy products for the poor, millions of people are still using kerosene lamps and are cooking on inefficient wood or charcoal stoves, which burn quickly and give off damaging fumes.
So why can’t the big multinationals swoop in to this huge potential market?
The answer lies in one word: distribution. As SolarAid CEO Steve Andrews says: “If product is king, distribution is God”.
The first distribution challenge is distance - most of the potential market is rural and hard to get to.
Imagine having to drive an hour or more just to see a handful of customers – or even only one. Now imagine having to go back to that one customer to fix something, or collect a payment for a solar home system that was bought on an 18-month credit scheme.
Now imagine that the route to get there is mostly off-road and is hard on your car, costing more time and money for vehicle maintenance.
One of this year’s Ashden Award finalists, SolarAid, has tackled this issue by working in partnership with schools. It brings together headmasters from a region who then talk to families in their school to tell them about the benefits of solar lanterns. This has allowed them to reach two million people in just 18 months.
And with distance comes the need for trust…
People in rural areas can be very conservative in their buying decisions, so need extra reassurance that they will be happy with their new products. There is no substitute for seeing them working in practice.
One of the best marketing strategies is to work with trusted members of the community to promote them and to see others using them. This is exactly what Impact Carbon is doing in Uganda, forming a partnership with the organisation LivingGoods, which has a network of women’s groups that sell door-to-door in rural villages. Working with these trusted local groups has more than doubled the amount of stoves sold every month by its client - Ashden Award runner up UgaStove.
The second distribution challenge is about customer service - the nature of the products means you need to be in contact with users multiple times.
No-one needs follow-up support for a can of Coca Cola or a bottle of water – but people who buy solar products for the first time need to be shown how to use and maintain them, and how to order replacements for parts.
If you’re a distributor and are not around to explain how to use a solar product or a new stove, or if something goes wrong and no one is available to help, it’s likely that your product’s reputation will sour and people will stop buying it.
Californian non-profit organisation Impact Carbon uses carbon finance to invest in local stove businesses and help them scale up their work – part of which involves showing them what good customer service looks like. For example, it guides companies through the process of implementing good record keeping, offering one-year guarantees and providing clear usage instructions on stoves.
This is essential to the carbon finance they access as stoves need to be verified that they are in use before receiving any credits to sell for carbon revenue. This also means people have a number on the stove to call if anything goes wrong.
The third distribution challenge is of course, about money – or more specifically, giving and receiving payments.
With many microfinance lenders still slow to enter the energy lending market, flexible payment schemes are emerging as the best solution to reach large numbers of rural poor – many of whom have little cash to spare, let alone a bank account.
Yet this brings with it the need for frequent travel to users. So if you’re selling solar products or stoves you need to get to your customers at least once a month to collect payments, or to remind people about overdue payments. You’ll also need to do quite a bit of work beforehand to assess whether your customers will be able to pay.
To get over this problem, Cambridge start-up Azuri has developed a pay-as-you go interface with solar mini kits that allow people to buy scratch cards and top up payments for their solar home systems every week, bypassing the need for a bank.
Business models with local solutions are the key
Neither big governments nor big businesses are nimble enough, entrepreneurial enough or creative enough to tackle these challenges.
Instead, it’s small and medium sized enterprises that are forging ahead and solving the distribution challenge, so unlocking the key to achieving scale.
I’m looking forward to hearing Ashden finalists Azuri, Impact Carbon, SolarAid and others share the secrets of their success at the Ashden Conference on 19 June.
Mariana Mazon is International Awards Manager at Ashden, a charity that champions and promotes practical, local energy solutions that cut carbon, protect the environment, reduce poverty and improve people’s lives.
The Ashden Awards are on 20 June 2013 and will be webcast on green.tv from 7pm BST. The Ashden Conference: ‘Are we on the brink of a sustainable energy revolution?’ is on 19 June at the Royal Society, Carlton Terrace. Find out more and book tickets here
Follow #Ashden13 on twitter.
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