Innovation for the Poor

Justin Guay, Sierra Club - India Program Officer

Sierra Club India Environment Post:

 

As the old adage goes, “If you only have a hammer, you tend to see every problem as a nail”. When it comes to decarbonizing the world economy this statement is surprisingly true. Energy companies and fossil fuel driven industries face sunk costs in physical and market infrastructure, assets and equipment, as well as human resources that can not necessarily be recouped or retooled for a clean energy economy. They are also set to earn the largest profits in world history as diminishing supplies and rising demand for the lifeblood of global society send energy prices constantly upward.

The collapses in Copenhagen and Washington D.C. however, have further reduced the chances that public institutions will step in any time soon to play their crucial role in breaking the death grip these industries have over the global economy. With recent staggering political failures, particularly in the UNFCCC process, it is time for a radical rethinking of climate policy.

For too long in our quest for global decarbonization we have hammered away at what we thought was a nail. This has resulted in a neglect of many potentially critical policies including fast acting mitigation strategies. Perhaps most importantly however, has been the lack of recognition of the need to ensure clean energy access for all.

While sweeping statements like this sound great it is important to understand their practical implications. One such example is SELCO-India founded by Harish Hande, a pioneer of the social entrepreneurship movement focused on solving the problems of India’s poor.  SELCO, which was recently the subject of a New York Times piece on rural energy access, was established in 1995 to provide sustainable energy solutions and services to under-served households and businesses in Karnataka, India.

“It was conceived in an effort to dispel three myths associated with sustainable technology and the rural sector as a target customer base: 1) Poor people cannot afford sustainable technologies; 2) Poor people cannot maintain sustainable technologies; 3) Social ventures cannot be run as commercial entities.” In short, SELCO dropped the hammer of conventional wisdom (particularly that energy delivery via centralized fossil fuels helps to alleviate poverty) at the door.

SELCO, like all social entrepreneurs, relies on the axiom promoted by the late CK Prahalad that the poor should be viewed as customers, not beneficiaries. Directly stemming from this philosophy came one of SELCO’s primary innovations - matching the irregular and inherently low cash flows of rural consumers with appropriate micro financing tools. The result was a successful engagement of third party micro financing to provide “doorstep” financing and service. This innovative commitment to building rural microfinance relationships focused on energy loans is a critical component to creating the market infrastructure for a clean energy economy in rural areas of the developing world.

SELCO now operates 25 energy service centers in Karnataka and Gujarat, India with 150 employees that have installed 100,000 solar home lighting systems. The servicing component is particularly important for costly technology and products that are often unknown or unproven to poor households (let alone the rich). The creation of this service infrastructure was another key innovation pursued by SELCO as there is a general lack of capability, both skills to develop and maintain innovative solutions as well as the skills to maintain and repair systems. In rural areas of India this means inventing both the hammer and the nail.

SELCO is now building further upon these innovations by incubating a clean energy marketplace through its latest effort an innovation center for the poor. The ICP was created because many poor households and small enterprises lack the infrastructure necessary for poverty alleviation. The ICP, funded by the Lemelson foundation, brings together the Self Employed Women’s Association Bank, Manila Housing SEWA Trust, and SELCO to provide innovative solutions (technology, financing, and process) that are building the renewable energy market infrastructure necessary to support improved earnings, enhanced quality of life, and improved working conditions for India’s poor.

Much like the infamous venture capital valley of death, renewable energy solutions in the developing world face the “last mile” implementation gap where many clean energy innovations fail to reach end consumers. SELCO’s innovation center employs a number of methods to help bridge this gap: 1) It partners with NGOs that enable it to draw from the large networks of low-income consumers for new product demos, refinement of products and ideation, 2) It supports a rotational program that brings the most experienced SELCO staff onsite allowing the lab to draw new product and process ideas from the field, while sharing new products for dissemination, 3) Its partnership with the established rural training center allows training courses designed by the Lab to piggyback on existing rural training infrastructure.

Perhaps the most impressive (and least conventional) aspect of the innovation center is the fact that it is open source. It has a stated goal of accelerating the growth of potential entrepreneurs by providing hands-on training, prototyping, pilot testing and mentorship. It also provides performance testing and consumer research services to third parties who have developed products for rural areas but lack the means, networks, or field presence for effective dissemination. A concept that U.S. negotiators like Todd Stern would do well to understand rather than continually hammering away at the enforcement of Intellectual Property Rights.

Ultimately, SELCO and its innovation center are moving beyond the failed approach of the past 30 years to begin actually building the desperately needed market infrastructure to provide clean energy to all. Undoubtedly further policy and private sector support will be needed to help scale these bottom-up solutions. Now, more than ever, it is time to free our thinking to focus on innovatively delivering clean energy to every citizen on this planet - a concept whose time has truly arrived.

This post appears courtesy of the Sierra Club India.

Check out more on Celsias:

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  • Posted on Sept. 13, 2010. Listed in:

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