Yau Ben-Or

Value exchange: A new business module for scaling up energy access

Background. Millions of people that can benefit from electricity-enabled services and products have no access to electricity. Both private and public initiatives to accelerate energy provision exist, however, their success in creating significant improvements in the lives of the lowest income communities has limited scalability and reach. While the sustainability of non-profit initiatives is limited due to the uncertainty of donor funding, low willingness to pay is a primary barrier to the success of profit-seeking initiatives.

Aim. This dissertation aims to help the private sector to scale rural electrification initiatives. It uses past research on rural villagers’ perceived value to identify electrical appliances for which villagers have high willingness to pay; then maps, evaluates and compares business models that deliver these appliances profitably.

Methods. To quantify willingness to pay for electrical appliances, purchasing simulations were conducted with 16 focus groups and eight community leaders in two rural villagers in Western Uganda. The two appliances that induced the highest willingness to pay in the purchasing simulations were then used as a base for three business model archetypes that were further developed to form seven representing business models. Then, the seven business models were evaluated and compared quantitatively and qualitatively. The evaluation process was done with the help of information collected in 11 interviews with local service providers.

Results. The two appliances that induced the highest willingness to pay were an irrigation pump and a system to charge mobile phones. The former was selected at least 240% more than any other appliance. The quantitative cash-flow evaluation shows that all seven business models that were built to deliver the two appliances are affordable and profitable. Among which, an 'individual product-based system' was most profitable. The further qualitative analysis suggests that a model of a 'community centre' might be more sustainable overall.

Conclusions. This study shows that financially sustainable initiatives can meet rural villagers' needs. Beyond addressing users’ willingness to pay, factors that had a positive effect on business sustainability were the responsiveness of the business model to changing users’ income and the ability to create synergy between multiple business entities. Finally, theoretical and practical next steps to leverage the conclusions of this study, to produce the desired impact, are highlighted.