June, 05, 2014
By: Zainab Kakal

5 Demands of Environment-focused Enterprises


On World Environment Day today, it’s only fitting that we highlight the most critical needs of social enterprises working in clean energy, water and sanitation. Why clean energy, water and sanitation?

Because three billion people in developing countries rely on traditional biomass for cooking and heating, one and a half billion people are without electricity and, even when energy services are available, millions of poor people are unable to pay for them.

Because more than 700 million people still lack ready access to improved sources of drinking water; nearly half are in sub-Saharan Africa. More than one third of the global population – some 2.5 billion people — do not use an improved sanitation facility, and of these 1 billion people still practice open defecation.

While entrepreneurial approaches have presented solutions that aid access and delivery of such basic services, several issues still mar the growth of these ventures. It is essential to address these issues with possible solutions to ensure scalable and sustained growth.

Here are top five needs of clean energy, water and sanitation enterprises:

1. Capital to scale
In order to expand and offer affordable products and services that meet the requirements of energy-deprived communities, enterprises need sufficient capital. Funds like Berkeley Energy are trying to close the gap but many more such efforts are required. Enterprises working specifically in the water and sanitation sector cater to local communities and find it difficult to replicate their model across geographies due to varying demographics and lack of adequate and sustained financing options. Unfortunately, this sector attracts the least amount of funding when in fact, it needs the most.

2. Skilled manpower
Clean energy enterprises incur high maintenance costs due to the dire absence of skilled labour. Many enterprises like Husk Power Systems have their own training schools to meet their labour needs but still many find it difficult to retain this labour, as many are known to migrate to cities from rural areas. With suitable skills training, human capital costs can be significantly reduced and boost growth of enterprises.

3. Consumer awareness
Building consumer awareness about and creating demand for products are critical for enterprises. In the energy space, customers tend to rely on traditional fuels such as kerosene & biomass even though they have adverse health and environmental impact. Similarly, people chose open defecation over toilets. Enterprises can’t compete with subsidized, cheap substitutes available in the market and hence, are forced to innovate to offer new and better technology for serving these markets. However, consumer awareness of the superiority of these technologies over existing ones is low and impacts uptake. Samagra, an enterprise that motivates people to pay to use toilets, actively involves and incentivizes all the stakeholders and generates a demand for its service. The success of such models lies in their ability to scale and an aware consumer can greatly enhance their growth.

4. Fitting regulatory frameworks
Clean energy enterprises require the right incentives in order to serve consumers and are closely dependant on governments for their support. In the absence of the suitable policy frameworks, enterprises operate in speculation. This does not allow for them to charter long term business plans. Water and sanitation businesses struggle with the least cost or lowest bid approach of the government in awarding contracts which hinders the enterprises’ ability to win contracts and sustain their business. A friendly policy environment is a must of forfor their success.

5. Incubation and R&D support
There exists a huge need for building the right capacities for enterprises through incubation and R&D assistance. In the absence of adequate support, companies like SELCO run incubation programmes that offer training and business development services to fledgling enterprises. The availability of such support services can encourage more enterprises serve the BOP markets efficiently.

(With inputs from Usha Ganesh, Sowmya Suryanarayanan & Ravina Kothari)

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