Every week at ID we read as many articles as we can on our favorite industry topics. In searching for an alternative energy BETA Resident, we’re studying the types of innovative clean technology solutions out there. In addition to a great product or technology, innovative business models and applications of the technology inspire us and are the topic of this week’s Weekly Review.
Photo Credit: Port of San Diego under Creative Commons
“The Clean-Tech Economy at the Base of the Pyramid” by Stuart L. Hart from The Conversation HBR Blogs
Hart laments that US companies aren’t taking advantage of the financial potential and social benefits of clean technology. Emerging markets like China, on the other hand, are producing affordable products that can “truly shift the market” to clean technology. In addition to environmental benefits, several Chinese companies are creating multi-billion dollar industries serving the poorest areas in China. For example, “Chinese solar companies like Tsinghua and Himin Solar” are providing energy access in underserved areas of China, thereby improving the lives of the citizens there. Hart gives class examples of business maintaining financial returns while also having a positive social and environmental impact. The US certainly does not lack the technology, but the business models, attitudes, and infrastructure that are already in place are difficult to change The Base of the Pyramid has an “advantage,” because new, innovative solutions can be introduced without disruption to current policies, systems, or infrastructure. We seek to invest in small, seed-stage companies with innovative energy solutions for the Base of the Pyramid. We hope it will serve as a model for US companies to follow and we’ll start to see more US based clean tech incubators like Greentown Labs.
“Scaling Green Energy Access from Millions to Billions” by Tom Boyd of Nokero via Ideas on Energy
Boyd offers a reality check: 1.6 billion people live without electricity and those that do, often only have access to unsafe and inefficient sources, most commonly kerosene lamps. Despite our efforts, the number of citizens actually using renewable energy in emerging markets is still too small. The solutions are highly effective, but are not quite reaching the necessary scale to increase access to safe and renewable energy. Boyd’s company Nokero offers solar light bulbs along with a “Power Panel” that can charge phones. In addition to a good product, social enterprises must have innovative business models to address the needs of the BoP as they are. Boyd outlines four innovative business models, including the benefits and challenges of each The four methods are: 1) the small enterprise approach, 2) the government subsidy approach, 3) the partial government subsidy approach, and 4) corporate, big-business approach. Our favorite is the small enterprise approach – market-based solutions that create micro-economies have both financial and social benefits for the investor, the entrepreneur, and most importantly, the customer. The customer usually saves money in the long-run from their investment and, using a solar light as an example, has access to safer and more efficient energy.
“Ashoka, Bamboo Finance, and the Canopus Foundation Join Forces to Launch Solar Energy Fund for Developing Countries” Press Release via Ashoka
The “Oasis Energy – Solar for All Fund” seeks to invest in social enterprises that provide affordable solar energy solutions in sub-Saharan Africa, India, South East Asia, and Central & Latin America. The Fund has been raised by the Solar for All (SfA) Initiative, launched by Ashoka and the Canopus Foundation. Bamboo Finance of the Blue Orchard Group has come on board to serve as the Fund’s investment advisor. The SfA Initiative’s objective is to bring “affordable solar power to 60 million off-grid households by 2020.” Now, with the Oasis Energy Fund, the SfA Initiative has become an impact investor for social enterprises.
One Laptop Per Child is currently a non-profit with an innovative product in developing countries. Developed close to home in the MIT Media Lab, the laptops they offer are powered by solar energy or by pulling a chain which creates energy. They are durable and able to sustain everything from a child’s usage to the climate’s harsh conditions. As we’ve said before, an innovative product isn’t enough. Non-profits have great missions and intentions. However, shifting part of the business to for-profit would allow OLPC to distribute more laptops and could create leasing arrangements with governments to allow the laptops to reach more children. As a for-profit social enterprise, OLPC’s business model will have a greater reach and will be able to source more innovative technological solutions to global poverty.
“Mexico Advances Renewable Goals But ‘Much More’ Could Be Done” by Ivan Castano from Renewable Energy World
Mexico and Latin America include many of the world’s poorest citizens with a huge potential for clean energy. Greenpeace said Mexico “could satisfy 95% of its electricity requirements from green energy by 2050 and 42% by 2015.” Some alternative energy options for Mexico are wind, geothermic, nuclear, hydraulic, and solar. According to the article, wind energy will lead the clean tech revolution in Mexico. There are also many biogas projects planned. Surprisingly, solar is overlooked. The weak commitment to alternative and renewable energy may be due to the perceived high costs and a commitment to oil and natural gas production. The government is planning to build several nuclear power stations, citing that a disaster like the one in Japan is unlikely to happen in Mexico, but without realizing the real risings costs of nuclear power. The government doesn’t realize the social benefits of energy access, and that the costs of renewable energy are decreasing or can be innovatively priced.
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