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This page links to short articles and discussions about several important topics affecting the energy-enterprise space. The first section deals with the eight critical factors that help predict how successful an enterprise will be. The second section addresses a number of complicated issues (i.e. policy frameworks and subsidies and carbon finance) that also impact the health and viability of energy enterprises for better or worse.
The enterprise-centered approach to development, and specifically to energy provision, hinges on the mutually beneficial relationship between the seller and customer. These transactions, and each side's ability to engage in them, are the starting point for much analysis regarding why some endeavors succeed and others fail. Examining this relationship can also provide hints at the possibilities for "going to scale". The variables discussed in this section represent the primary factors that promote each side's capacity
willingness to participate in the sale and purchase of improved energy products and services.
Entrepreneurs are the engine of the whole proposition; they may need fuel (i.e. services and capital), but ultimately it is their hard work and dedication that leads to success. Not everyone is cut out to be an entrepreneur, self-motivated and willing to assume large amounts of responsibility and risk. However, in any community, there are bound to be some entrepreneurial types...
Do people want what is for sale? Will it provide better service, cost-savings? Will it result in a reduced daily burden, provide health benefits or result in the opportunity to generate more income for another business? How much are customers willing to pay for these improved energy services?
Technology is merely set of tools used to achieve certain ends. In general, there is already more than enough technology available to make dramatic gains in how energy is produced, stored, distributed and consumed. The most successful technologies that have been promoted with a business approach have all been relatively mature, proven and robust. This topic, however, is not just about gadgets. It can also be thought of as
There is no demand for a product if individuals don't know it exists. Products must be marketed to raise awareness about the positive and negative impacts associated with various types of technologies. The knowledge gap can sometimes be very serious, especially in new market segments, sectors, and locations.
Enterprise services is about helping to ensure that the entrepreneur is well-equipped to pick up technology and financing, and use them to create a viable and thriving business. In the presence of more relaxed collateral requirements, the extra time and resources spent on service provision help to guarantee the success of the business and help enablers better get to know the personality of the entrepreneur with whom they are dealing.
Good customer service includes (but is not limited to) product guarantees and warranties, affordable maintenance contracts, on-site technology training, delivery services, and speedy repair times. All are critical if customers are to have well-functioning products, which will lead to greater satisfaction and peer recommendations. Good customer service also reduces the chance of default on any consumer loans.
The problem of limited access to capital in the developing world is an old story. It was addressed many years ago by institutions like the World Bank for project finance, and the 1980's saw the start and dramatic growth of microfinance. But today there is still talk of the "missing middle" or what one might call
. Why does it still appear so challenging? Should it be?
Demand is not just about wanting something, it's about wanting something and being willing/able to pay a certain price for it. Poor and/or rural customers are severely limited by the amount of savings or working capital they have on hand. A lack of consumer finance significantly dampens demand. Some microfinance institutions are moving into lending for energy, but many more are still uncomfortable with the lending model for a variety of reasons explored here.
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Policy and Enabling Environments
What are the factors beyond the immediate enterprise-customer relationship that are capable of influencing outcomes? Tax treatment, energy regulation, business and investment regulations and bureaucracy, government subsidies, carbon markets, bank laws, the presence and strength of various financial institutions... the list goes on and on. This section also takes a bottom-up look at true deal-breakers - policy interventions that didn't produce any significant gains, when a simple lack of interference may be all that was required. In addition, there are some examples of active policy interventions that have proved catalytic to stimulating market activity.
Carbon finance can be used to aid in clean energy business development. Where has it been most influential so far? What criteria need to be met in order to develop businesses' carbon potential? Additionally, some background materials on the science of climate change and the various standards and methodologies are included.
This section first maps the universe of possible points for various subsidies to enter the value chain, then questions both the relative effectiveness
efficiency of several types of subsidies, and, lastly, provides three contrasting examples of subsidies currently used to promote clean energy access in conjunction with a sustainable business approach.
Avenues of Intervention
What are the possible avenues for intervention and which are best suited to the organization and local context? This section highlights some different strategies for program and institutional design from the perspective of a large donor, a government agency or a small NGO wanting to get involved in promoting the clean energy space.
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