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Business Model Canvas
- Vivek Jha
- I H Rehman
Structure of the module 1. Conceptual framework for the ‘energy
delivery model’
2. Three-phase approach to designing an
energy delivery model
3. Guidelines for implementing a business
model
Defining modern energy access
A household having reliable and affordable access to clean cooking
facilities, a first connection to electricity and then an increasing level
of electricity consumption over time to reach the regional average - IEA (WEO 2011)
Demystify… 1. Rural areas [250 KWh (per hh per annum); 5h per day]
1. Floor fan + A mobile device + 2 CFL light bulbs
2. LPG/Biogas/ICS
2. Urban areas [500 KWh (per hh per annum); 5h per day]
1. Floor fan + 2 mobile devices + 2 CFL light bulbs + efficient
refrigerator + small TV/computer
2. LPG/Biogas/ICS
3. By 2030 – 800 KWh for all new connections
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Current levels of investment
USD 9.1 billion in 2009
Bilateral Official Development
Assistance, 14%
Multilateral organizations, 34%
Developing country
governments, 30%
Private sector finance, 22%
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
However…
In order to
1. Cover 1.3 billion people without electricity
2. Cover 2.6 billion people without access to modern cooking energy services
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Average annual investment
USD 48 billion per year till 2030
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Average annual investment
USD 48 billion per year till 2030
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Average annual investment
USD 19.6 billion per year till 2030
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Average annual investment
USD 19.6 billion per year till 2030
•Electricity: On-grid, isolated off-grid, mini-grid
•Cooking: Liquefied petroleum gas (LPG), biogas, advanced cook stoves (biomass & electricity)
Technology solutions
•Grants
•Equity
• Loans
• Insurance
• Subsidies
•Guarantees
Financing instruments •Multilateral organizations
•Bilateral Official Development Assistance (ODA)
•Developing country governments
•Private sector
Financing sources
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Sources of financing…
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Sources of financing…
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
Sources of financing…
IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.
http://asmarterplanet.com/blog/2012/02/energy-aid-parliamentary-launch-during-un-year-of-sustainable-energy-for-all.html
http://asmarterplanet.com/blog/2012/02/energy-aid-parliamentary-launch-during-un-year-of-sustainable-energy-for-all.html
Case Exercise!!
In 1958…
Chester Carlson was an American physicist, inventor, and patent attorney born in Seattle, Washington
Lies high and to the
right!!
End user
Define a energy delivery
model…
Energy delivery model for the poor
For whom?
What?
How?
Challenge conventional way of
doing things
Guy Kawasaki, Art of the Start.
Map of the pro-poor energy
delivery system
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Four key building blocks
1. The delivery model – the set of activities and group
of actors that are necessary to deliver the service(s)
2. The enabling environment – the external
environment that influences and enables the delivery
model
3. The socio-cultural context – the wider socio-
cultural context in which the activities and the actors
who carry them out are embedded
4. Supporting services – any external support that the
delivery model might need due to weaknesses in the
enabling environment or a need to adapt to specific
circumstances of the social-cultural context
Principles of a well-designed
pro-poor energy delivery model
1. Explicitly designed to have a positive human development impact, creating health, education and livelihood benefits.
2. Economically sustainable over its entire life cycle (so including,
where required, financial support in the form of subsidies, start-up
grants and livelihoods support. These should be factored in
explicitly from the outset).
3. Technologically appropriate to the context (i.e. it can be locally
managed and maintained) and capable of meeting the energy
needs and wants of end users.
4. Environmentally sustainable and socially inclusive. This requires robust assessment and on-going monitoring of its potential and
actual environmental and social impacts (both local and
national).
5. Emerges from negotiations among multiple stakeholders, including end users, which results in a common definition of
objectives and agreement on an implementation framework.
Ideally…
Not a ‘one-off’ intervention but
adaptable to different contexts and
replicable or scalable to reach
greater numbers of people living in
energy poverty.
Three phases of designing an
energy delivery model
1. Phase 1: Identifying demand
2. Phase 2: Market and context analysis
3. Phase 3: Designing the delivery model
Phase I: Identifying demand
1. Identify the context for intervention
1. A geographical area 2. A target group
3. A specific objective 2. Carry out an energy needs and wants assessment
3. Nail down the energy gaps 4. Identify potential solutions and define objectives
Identifying demand
Objectives
Stakeholders and end
users
Ideas
Phase II: Market and context
analysis
1. Participatory planning and analysis using tools What does the market chain look like?
Who would the main actors be?...
Is the business proposition economically sustainable?
What other developmental benefits will it provide? Etc.
2. Field research and definition of a base line
Market & Context analysis
Field research
Baseline
Phase III: Designing the
delivery model
1. Mapping and refining solutions 2. Identify supporting services
3. Implementing planning and M&E
1. Pilot stage
2. Testing and M&E
3. Roll out of the product(s)/services
4. Maintenance
Designing the
delivery model
Implementation plan
M&E
All the phases together
Intervention
Osterwalder’s Business Model
Canvas
This is a visual tool for developing
service or product delivery models.
It helps companies make strategic management decisions about their
business activities by mapping
potential trade-offs. The categories
in the model can be grouped as follows:
1. The value proposition: the business idea itself
2. Infrastructure: the set of activities, resources and network of partners
required to operate the value proposition
3. Customers: these are grouped in different segments, approached in
various ways (relationships) and reached through the channels that
allow the company to promote and deliver its products and to provide
after-sale support, and allow the customer to evaluate and purchase
them
4. Finance: this is divided into all the costs to be balanced by the streams
of revenue
Business model generator
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Business model generator
Key Stakeholders
End-user Segments
End-user Relationships
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Customer segments
Defines the different groups of people or organizations an enterprise
aims to reach and serve
End-user segment
Lighting a billion lives (LaBL)
500000+
Lives Touched
100000+
Households Illuminated
2308
Villages Lit Up
22
States Covered
Customer segments
End-user segment
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Value proposition
Describes the bundle of products and services that create value for a
specific customer segment
Value proposition
Grameen Bank
Start with the problem rather than the solution!!
Value proposition
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Channels
Describes how a company communicates with and reaches its
customer segments to deliver a value proposition
Channels
M-Pesa is a mobile based money transfer
and microfinancing service for safaricom
and vodacom, the largest mobile network
operators in Kenya and Tanzania. Currently the most developed mobile
payment system in the world
M-Pesa allows users with a national id card
or passport to deposit, withdraw, and
transfer money easily with a mobile device
Channels
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Customer relationships
Describes the types of relationships a company establishes with
specific customer segments
Customer relationships
End-user relationships
Customer relationships
End-user relationships
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Revenue streams
Represent the cash a company generates from each customer
segment
Costs must be subtracted from revenues to create earnings
Revenue streams
Sun Edison LLC owns and operates power
plants in North America and provides solar
generated energy to commercial,
government and utility customers The company provides solar energy
services, which include renewable power,
monitoring, marketing, renewable portfolio
standards, and solar tariff services.
Sun Edison LLC was founded by Jigar Shah
in 2003
Sun Edison has over 52 MW of hands-on
installation experience and over 31 MW
under management
Revenue streams
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Key activities
Describes the most important thing a company must do to make its
business model work
Key activities
WEAVE A MAT – milestones,
assumptions and tasks
Milestone “Finish design”
Assumptions “number of demonstrations per day”
Tasks “Rent a project monitoring unit”
Key activities
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Key partners
Describes the network of suppliers and partners that make the
business model work
Key partners
It all began when
milk became a
symbol of protest
Founded in 1946 to
stop the exploitation
by middlemen
Inspired by the
freedom movement
Key partners
Key stakeholders
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Cost structure
Describes all costs incurred to operate a business model
Cost structure
Financial cost structure
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
In addition…
Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED
Delivery model
CASE ILLUSRATION:
Scaling up clean cook stoves…
DfID TERI cook stove programme in India
Scaling up the use of clean cooking
technologies for poor households
Target group – 100,000 underserved households
in India
Transition
Context…
Deprived of LPG/ electricity based
cooking
50% of world population
Depend on mud stove
Low (10%) thermal efficiency
4 million premature deaths from
Household Air Pollution annually
Inefficient household energy use has adverse
consequences for the environment, air quality
and human health
Additionally…
Solid fuel burning contributes to 25% of
global anthropogenic Black Carbon -BC emissions
BC is defined as the solid form of mostly
pure carbon that absorbs visible sunlight
Product of incomplete combustion of carbon-based fuels
CO2
CH4
O3
BC
BC has recently emerged in climate change
debate Second largest global warming agent
Short Lived (~2 weeks)
Low hanging fruit: available technologies, local impact
Buy time for CO2 negotiations
WE have been focusing on research related to rural energy for past three decades,
of which energy services related to cooking form an important part
Proj ect Sur ya
I NST EP – Proj ect wi t h DST
Focused on quant if ying har mf ul emissions f rom improved co ok stves
Focused on research, custom iz at ion and d evel opm ent of improved co ok ing
d evices
The larger chunk…
Black Carbon?
Micro-Aethalometer
50 mLPM
Focus: Improved biomass cook
stoves…
IEA Projection:
Dependence on
biomass as cooking fuel
in 2030
Value Proposition to
users Saves fuel
Reduce smoke in kitchen
Decrease cooking time
Technology Types
Forced Draft: “Gasifier”
stoves with two-stage
combustion aided by
fan
Natural Draft: Improved
one stage burning-
“rocket elbow”
combustion chamber
Technology Types
Improved stoves are
not equal
Forced Draft >
Natural Draft
Scaling up ??
Addressing barriers!!
Effective delivery & service provision
Addressing technical barriers
Addressing non-economic barriers
Financial support
ü TP Networks ü Value chain creation
– distributor & EE
ü Incentives ü Credit – network with
RRB/MFI
ü Customization ü Technical inputs to
manufactures
ü Information Education and Communication
(IEC)
I.
II.
III.
IV.
1. 2. Value proposition Customer segment 3. Channels
5. Key activities 4. Customer relationship
6. 7. Key partners Financial Flows
Local Grass root organizations
Community based organizations
SHG Federations
Energy Enterprise
a.
b.
v Establishment of EE & Distributor network v Setting up benchmarks for manufacturing v Developing a network of TP
v Networking with Financial Institutions – Commercial bank/ RRB/ MFI
v Developing and implementing a framework of
incentives
v Customization of technology v Technical support to manufacturers v Policy advocacy
v Awareness generation within end users, manufacturers and policy makers
v Policy advocacy
v Networking with knowledge institutions for research & development
Thank you!!