RenewableEnergyatthe
BaseofthePyramid
inHaiti
MastersProjectFinalReport
U‐MSchoolofNaturalResources
andEnvironment
Preparedby
Wan‐ningChen,AnneliseLemes,AditiMoorthy,
LukasStrickland,andYicongZhu
April22,2014,AnnArbor,Michigan
ExecutiveSummary
ThisdocumentpresentstheworkoftheUniversityofMichigan,SchoolofNatural
ResourcesandEnvironment,2013‐2014MastersProjectteamcomprisedofWan‐Ning
Chen,AnneliseLemes,AditiMoorthy,LukasStrickland,andYicongZhu.Ourprojectwas
presentedtotheUniversityonApril11,2014inthe“SustainableEnterprise”category.The
projectclientwastheSolarElectricLightFund,aninternationalnon‐profitorganization
basedinWashington,D.C.,thatfocusesonthesustainabledevelopmentofelectrificationin
thedevelopingworldthroughtheconstructionofrenewableenergysystems.Additionally,
theteamcollaboratedcloselywithmanyotherorganizations,themostrelevantofwhich
wereAshoka,InnovatorsforthePublic,aninternationalsocialentrepreneurshipnetwork,
andMicamaSoley,aHaiti‐basedfor‐profitenterprisefocusingondevelopingrenewable
energysolutionsforruralHaitians.
Broadly,theinitialgoalofourprojectwastoassistaninternationalorganization
designandimplementarenewableenergyprojectthatwouldbringelectricitytorural
inhabitantsinthedevelopingworld.AlthoughtheSolarElectricLightFundwasnotour
originalclient,becauseofthealignmentofourgoalswiththeirs,allpartiesagreedthata
partnershipbetweenourteamandthatorganizationwouldmakeforastrongerproject.
AfterinitiatingthepartnershipwiththeSolarElectricLightFund,thefirststageof
ourprojectconsistedofextensiveprimaryandsecondaryresearchthatgaveusintimate
familiaritywiththeglobalenergyaccesschallenge,thesolarlanternindustry,and,more
specifically,withHaiti.OurclientfacilitatedatriptoHaitiduringwhichteammembers
conductedasocioeconomicsurveythathighlightedtheextentoftheenergyneedsinoneof
theworld’spoorestcountries.Italsoplacedthatneedinthebroadercontextofother
developmentchallenges,includingeducation,sanitation,healthcare,nutrition,andothers.
Thesecond,moresubstantivestageofourprojectconsistedofapplyingthe
learningsfromtheresearchphasetohelpourclientlaythefoundationforagrantproject
focusedonbuildingaself‐sustaininglanterndistributionnetworkonHaiti’sparticularly
impoverishedCentralPlateau.WiththeblessingoftheSolarElectricLightFund,the
MastersTeampartneredwithlocalorganizationsinHaiti,andhelpedourclientbuilda
businessplanandpartnershipnetworkthatshouldallowthemtosatisfythetermsoftheir
grantprojectwhileimprovingthelivesofthousandsofruralHaitians.
Thisdocumentpresentsallphasesofourworkinfourchapters:ChapterIprovides
anoverviewofourprimaryandsecondaryresearchoftheglobalenergyaccesschallenge
andthesolarlanternindustry;ChapterIIoutlinestheprojectbuildingworkthattheteam
undertookinthelatterhalfoftheproject;ChapterIIIcriticallyanalyzestheprojectdesign
thatresultedfromstagetwooftheproject;andChapterIVprovidesanoverviewofthe
risksthattheteamperceivesforsuccessfulprojectimplementationandour
recommendationsforovercomingthem.
i
Table of Contents ACKNOWLEDGEMENTS........................................................................................................................................3
ABBREVIATIONS....................................................................................................................................................4
INTRODUCTION......................................................................................................................................................6
CHAPTERI.ENERGYACCESSATTHEBASEOFTHEPYRAMID..............................................................9
SECTION1.THEGLOBALCONTEXTOFTHEENERGYCHALLENGE..............................................................................9
IntroductiontotheBaseofthePyramid.......................................................................................................................9
EnergyAccessChallenges.................................................................................................................................................10
EnergySolutionsfortheBaseofthePyramid.........................................................................................................11
SECTION2.THEDEVELOPMENTCHALLENGEINHAITI..............................................................................................13
CountryOverview.................................................................................................................................................................13
EconomicStatus....................................................................................................................................................................13
BusinessEnvironment........................................................................................................................................................15
EnergyInfrastructureinHaiti........................................................................................................................................15
Health&Safety..................................................................................................................................................................................................16
Cell‐phoneUsage..............................................................................................................................................................................................17
CaseStudy:AFieldSurveyinFe‐YoBien,Haiti......................................................................................................17
Willingness‐to‐PayStudyforElectricityAccessinHaiti....................................................................................19
SECTION3.ABUSINESSMODELAPPROACHTOLANTERNDISTRIBUTION..............................................................21
ABusinessApproachtoLanternDistribution.........................................................................................................21
BarrierstoSuccess...............................................................................................................................................................21
MarketBarrier#1.AccesstoFinance.....................................................................................................................................................21
MarketBarrier#2.DistributionChallenges.........................................................................................................................................24
MarketBarrier#3.ConsumerAwareness.............................................................................................................................................27
MarketBarrier#4.PoorProductQuality&MarketSpoilage........................................................................................................27
MarketBarrier#5.PolicyChallenges......................................................................................................................................................29
MarketBarrier#6.After‐SalesServices.................................................................................................................................................30
Casestudies..............................................................................................................................................................................30
CaseStudy#1.GreenlightPlanet..............................................................................................................................................................31
CaseStudy#2.SELCOIndia.........................................................................................................................................................................32
CaseStudy#3.SunnyMoney......................................................................................................................................................................34
CaseStudy#4:d.Light....................................................................................................................................................................................36
SolarLanternProjectsinHaiti.......................................................................................................................................38
Project#1.GlobalSustainableElectricityPartnership....................................................................................................................38
Project#2.WakaWaka..................................................................................................................................................................................39
Project#3.Let’sSharetheSun&PhocosNorthAmerica...............................................................................................................41
Haiti:Lookingtothefuture.............................................................................................................................................42
CHAPTERII.THESOLARLANTERNPROJECTINHAITI–STRATEGYINACTION..........................44
INTRODUCTION......................................................................................................................................................................44
SECTION1.PROJECTDESIGN...........................................................................................................................................45
OverviewoftheProjectDesign.......................................................................................................................................45
DistributionPlan...................................................................................................................................................................47
ProgramFinancing..............................................................................................................................................................48
Marketing,ConsumerAwareness,andEntrepreneurTraining......................................................................50
LanternProductselection................................................................................................................................................52
LanternQuantity..............................................................................................................................................................................................52
SolarLanterns‐ProductsandManufacturers.....................................................................................................................................52
After‐SalesServiceandProductMaintenance........................................................................................................56
SECTION2.FUTURESTEPS...............................................................................................................................................58
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CHAPTERIII.ACRITICALASSESSMENTOFTHEPROJECT...................................................................59
INTRODUCTION......................................................................................................................................................................59
SECTION1.SOCIALIMPACTASSESSMENT.....................................................................................................................60
EconomicWell‐Being..........................................................................................................................................................60
CapabilityWell‐Being.........................................................................................................................................................61
RelationshipWell‐Being....................................................................................................................................................61
SECTION2.ASSESSMENTOFTHEBUSINESSMODEL...................................................................................................63
Resources..................................................................................................................................................................................63
Metrics.......................................................................................................................................................................................63
Structures.................................................................................................................................................................................64
CHAPTERIV.OUTLOOKFORTHEFUTURE:RISKANDRECOMMENDATIONS...............................65
RISKANDSOLUTIONS...........................................................................................................................................................65
RECOMMENDATIONS............................................................................................................................................................66
CONCLUSION.........................................................................................................................................................68
APPENDIXI.SELECTEDSOLARLANTERNMODELS............................................................................69
REFERENCES.........................................................................................................................................................70
2
Acknowledgements TheMastersTeamwouldliketothankthemanyindividualsthatmadeourproject
experiencepossible.First‐and‐foremost,wewouldliketothankThomasGladwin,our
tirelessadvisorwhowasthereforusfromthestartthroughthickandthin.His
encouragementandguidancehelpedusperseverethroughthemanychallengeswe
encounteredalongtheway.
WewouldliketothankBobFreling,JeffLahl,DarrenAnderson,Jean‐Baptiste
Certain,andJosephLuniqueattheSolarElectricLightFund–ourprojectclient–whose
enthusiasmforourworkkeptusgoing.Despitebeingburiedwiththeirownmore
immediateneeds,theseindividualsconsistentlycarvedtimeoutoftheirschedulestospeak
withusandkeepusontracktosuccessfullycompletingourproject.Jean‐Baptisteand
Lunique,LukasStricklandwouldliketothankyouinparticularforyourhospitalityduring
histriptovisitSELF’soperationsinHaiti.Itwastheexperienceofalifetime,and
immenselyhelpfulforthedevelopmentofourproject.
TomAdamsonwasinstrumentalinhelpingusconcludeourprojectinameaningful
way.Duringacrucialphaseofourproject,hetooktimetoSkypewithusfromHaitiinthe
evenings,onweekends,andevenexchangeemailswithuswhileonvacationoverseas.Our
projectwouldnotbethesamewithoutthesignificantrolethatheplayed.
Likewise,withoutthesupportofthewonderfulstaffattheSchoolofNatural
ResourcesandEnvironmentourprojectwouldneverhavemadeitofftheground.Sondra
Auerbach,DianaWoodworth,JudyByington,inparticular,werealwaystherewhenwe
neededtheirassistance,eachintheirowncheerfulway.
Finally,theteamwouldliketoextendathankyoutothemanyacademicsand
professionalsinthesolarlanternfieldwholentustheirtimeandexpertiseinthisendeavor.
XiaowenLinofAshokaparticularlystandsoutashavingplayedaveryimportantroleinthe
earlystagesofourproject.Withoutthecontributionofeachandeveryoneofthese
individuals,oureffortswouldhavebeenfornaught.
3
Abbreviations ARE ASCAs BOP CEO CFI CFO CIA GDP GP GSEP HREC Alliance for Rural Electrification Accumulating Savings and Credit Associations Base of the Pyramid Chief Executive Officer Center for Facilitation of Investments Chief Financial Officer Central Intelligence Agency Gross Domestic Product Global Partnerships Global Sustainable Electricity Partnership Haiti Rural Electric Cooperative IDB IEA IFC INR LED LSTS mAh MFI MNC MOU NGO NiMH NRECA PV ROSCAs SACCOs SELF SEWA SHS U.K. UN UNDP UNEP Inter‐America Development Bank International Energy Agency International Finance Corporation Indian Rupee Light Emitting Diode Let's Share the Sun Foundation Milliamp Hour Microfinance Institution Multinational Corporation Memorandum of Understanding Non‐Government Organization Nickel‐Metal Hydride National Rural Electric Cooperative Association Photovoltaic Rotating Savings and Credit Associations Savings and Credit Cooperative Organizations Solar Electric Light Fund Self‐Employed Women's Association Solar Home System United Kingdom United Nations United Nations Development Programme United Nations Environment Programme 4
UNHCR US USAID USB VSLAs WHO WRI WTP United Nations Refugee Agency United States United States Agency for International Development Universal Serial Bus Village Savings Loan Associations World Health Organization World Resources Institute Willingness‐to‐pay 5
Introduction Fourbillionoftheearth’speopleearnanincomethatisinsufficienttosupportthe
mostbasicstandardsofliving.Theseindividualsarecommonlyreferredtoasbelongingto
the“baseofthe(economic)pyramid”or“BOP”(IFC,2007).Inmanycases,BOP
communitiesnotonlylackincomegenerationopportunities,butcrucialinfrastructurethat
aretakenforgrantedindevelopedeconomies,includinghealthcarefacilities,schools,
runningwater,sanitation,andelectricity.ThisMastersTeamsetouttoinvestigatethe
energyaccesschallengeforBOPcommunities,theimpactsresultingfromalackofenergy
infrastructure,andmostimportantly,whatcanbedonetoamelioratethesituation.
Withthisgoalinmind,wepartneredwithaWashingtonD.C.‐basedorganization,
Ashoka,intheearlystagesoftheprojecttojointlyidentifyclientsworkingtoprovide
energyaccesssolutionsforBOPpopulations.Ashokaisaleadingsocialentrepreneurship
organization,foundedbyBillDaytonin1980.Itisaglobalassociationoftheworld’s
leadingsocialentrepreneurs,individualswithsystem‐changingsolutionsfortheworld’s
mosturgentsocialproblems(Mars,2014).Theentrepreneursareselectedas“Ashoka
Fellows,”andarepartoftheAshokaVentureandFellowshipProgram.AshokaFellows
engageinmeaningfulhighimpactsocialventuresindevelopingnations,infieldssuchas
health,education,environment,humanrights,economicdevelopmentandcivic
participation.ThankstoourworkwithAshokaoverthecourseofthefirstfewmonthsof
theMastersProject,wegainedextensiveexperiencewiththeenergyaccesschallenges
facedbytheBOP,andwereabletomakevaluablecontactswithpractitionersinthefield.
Ashokaintroducedustooureventualclient,theSolarElectricLightFund(SELF),which
becameourlong‐termpartnerforourMastersProject.
SELF–alsobasedinWashington,D.C.–designsandimplementssolarenergy
solutionsthatassistindividualslivinginenergypovertywiththeireconomic,educational,
healthcareandagriculturaldevelopmentchallenges(SELF,2014).SELFhascompleted
projectsinmorethantwentycountries,pioneeringuniqueapplicationsofsolarpowerfor
dripirrigationinBenin,healthcareinHaiti,telemedicineintheAmazonrainforest,online
learninginSouthAfrica,andmicroenterprisedevelopmentinNigeria(SELF,2012).The
majorityofSELF’srevenuecomesfromcharitabledonationsfromfoundationsand
individuals(SELF,2012).Aftertheinitialintroduction,theU‐Mteamdecidedtocollaborate
withSELFonaprojectinvolvingsolarlanterndistributioninoneoftheorganization’s
primaryfocusareas:Haiti.
SELFandtheInter‐AmericanDevelopmentBankareregularcollaboratorson
energyprojectsinCentralAmericaandtheCaribbean.IDBeventuallybecameanimportant
behind‐the‐scenespartnerinourMastersProjectthroughitsinvolvementwithSELFin
Haiti.TheIDBisadevelopmentbankheadquarteredinWashington,D.C.thatservesasone
ofthelargestsourcesofdevelopmentfinancingforLatinAmerica.TheIDBlendsto
6
national,provincial,stateandmunicipalgovernmentsandgovernmentalagencies,aswell
astoprivatesectorcompanies.Bytheendof2013,theIDBhadapprovednearly$232
billioninloansandguaranteestofinanceprojectswithinvestmentstotalingover$481
billion.TheIDBobtainsitsownfinancialresourcesfromits48membercountries,by
borrowingsfromfinancialmarketsandtrustfundsthatitadministers,andthroughco‐
financingfor‐profitventures(IDB,2013a).
In2013,SELFreceivedalargegrantfromIDBtodeveloptwoprojectsinHaiti:a
solar‐poweredgridprojectthatwillprovideelectricityforthousandsofruralresidentson
thecountry’sSoutherncoast,andasolarlanternprojectgearedtowardimprovingenergy
accessforHaitianslivingintheCentralPlateauregion.Fromthebeginningofourwork
withSELF,itwasclearthatourinterestsandexpertisewerebestalignedwiththesolar
lanternproject.ThebulkofourresearchandworkwithSELFhasbeenfocusedonthe
successfuldevelopmentandimplementationofthatproject.
Theprimaryaimofthelanternprojectistoprovidelowcostsolarlightingand
cellphonechargingsolutionstolowincomepopulationswhowouldnotordinarilyhave
accesstoclean,affordableenergy.Itistailoredspecificallytowardspopulationswithno
accesstothenationalpowergridorotherruralenergyprograms.Inordertomaximize
socialimpact,theagreementwithIDBstipulatesamixofproductsthatincludesabasic,
lowercostmodel(US$15)andaslightlymoreexpensiveone(US$35‐40)withcellphone
chargingcapabilities.Thebudgetforequipment,shippingandstorageissetat$100,000,
whichwillresultinaninitialpurchaseofroughly5,000lanterns.Anadditional$50,000
wasreservedforimplementationandtraining.
SELF’sgoalwastoidentifythemostefficientwayofusingthefunds,andtobuilda
distributionnetworkforthelanternsthatwouldideallyoutlastthetermsofthegrant.The
MastersTeamwaschargedwithhelpingSELFassessitsdistributionoptions,with
emphasistobeplaceduponidentifyinganNGO,privatebusiness,orcooperativealready
operatingintheCentralPlateauregionthatcouldmanagethedistributionnetwork.
PartneringwithsuchanorganizationwouldalleviatetheneedforSELFtomaterially
participateinthedistributionnetwork,whichisnotoneofitscoreareasofexpertise.The
teamprovidedstrategicrecommendationsonanumberofkeytopics:identifyingwhich
solarlanternmanufacturershadthebestreputationsforproductqualityandwouldsatisfy
theneedsoftheproject;researchingandsummarizingthekeychallengesofsettingupa
successfulsolarlanterndistributionnetworkandstrategiesformitigatingthem;and
helpingSELFsetupthedistributionnetworkoncetheplanwasfinalizedandpartnerswere
identified.
SinceJuly2013theteamhasbeenengagedinallofthesetasks.Theresultsofthese
effortsarepresentedinthisdocument.ChapterIprovidesanextensiveoverviewofour
secondaryresearch,aswellastheresultsofaSELF‐facilitatedteamvisittoFe‐YoBien,a
ruralcommunityontheCentralPlateau.InSection1,wesummarizeourresearchintothe
7
BOP,theglobalenergychallenge,andtheavailabilityoftechnologicalsolutions.Insection
2,weprovideanin‐depthlookatHaiti,includinganassessmentofitseconomy,theenergy
challengesthecountryfaces,theresultsofourprimaryresearch,andwillingnesstopay
informationthathelpedinformourunderstandingofthefeasibilityofsellinglanternsto
ruralfamilies.InSection3,wepresentabusinessmodelapproachtolanterndistribution,
arguingthatithascertainadvantagesoverconventionaldonation‐basedmodels.We
presentthespecificchallengesassociatedwithestablishingafinanciallyself‐sustaining
distributionmodel.Throughextensivecasestudies,weoutlinesolutionsthatorganizations
havedevisedtoovercomethosechallenges.ChapterIIIconcludeswithanoverviewof
lanterndistributioneffortsthathavebeenunderwayto‐dateinHaiti.
ChapterIIoutlinestheworkthattheMastersTeamcompletedforSELFtowardthe
actualestablishmentofaself‐sustainingdistributionnetworkinHaiti.Inparticular,we
reviewtheultimateproductselection,thedistributionmodel,programfinancing,training
foron‐the‐groundpartners,marketingandconsumerawareness,serviceandmaintenance,
andtheoutlookforthefutureoftheproject.ChapterIIIturnstheteam’sanalyticaleyeback
upontheworkwehavecompleted,andpresentsacriticalassessmentoftheprojectdesign,
highlightingthesocialoutcomesithopestoachieve,aswellasitsstrengthsand
weaknesses.ChapterIVfocusesonrisksandrecommendationstheteamsoughtto
highlightforSELF,theIDB,andtheiron‐the‐groundpartners.
8
CHAPTER I. Energy Access at the Base of the Pyramid SECTION 1. The Global Context of the Energy Challenge Introduction to the Base of the Pyramid The“BaseofthePyramid”(BOP)isthenamegiventothe4billionpeoplewith
incomesbelow$3,000inlocalpurchasingpower(IFC,2007).AsshowninTable1,the
majorityoftheBOPisconcentratedinAsiawhereapproximately84%ofthetotal
population–roughly2.9billionpeople–belongstotheBOP.
Table 1. BOP Population and Income by Regions (IFC, 2007) BOP population
(millions)
BOP share of total
population (%)
Africa
486
95.1
Asia
Eastern Europe
Latin America & Caribbean
Haiti
2858
254
360
7.8
83.4
63.8
69.9
95.0
BOP income (millions)
PPP
US$
429,000
120,000
3,470,000
458,000
509,000
4,260.60
Theconvenienttermeasilylendsitselftoconsidering
theBOPasamonolithicentity,butthisisfarfromthecase.
TheBOPisdividedintosixincometiersthatrangefrom
$500to$3,000annuallyinlocalpurchasingpower.The
bottomtieroftheBOPincludesindividualswhoseincomes
areequalorlessthan$500,orthe“BOP500.”Similarly,the
“BOP3000”representstheuppertieroftheBOP,whose
constituentsearn$3,000orless.Thereareotherfactors
indicatingtheheterogeneityoftheBOP,forexamplethe
challengesfacedinruralversusurbansegmentsoftheBOP
varydrastically,astheydofromonecontinenttoanother.
WhiletheBOPpopulationinLatinAmericaisconcentrated
inthehighesteconomicstratawithamajorityofthe
populationlocatedinurbanareas,inAsiathevastmajority
oftheBOPpopulationisconcentratedinruralareas(Figure
1).
742,000
135,000
229,000
958.2
BOP share of total
income (%)
70.5
41.7
36.0
28.2
62.9
Figure 1. Total BOP spending by income segment, urban and rural (IFC, 2007) Inmostcases,mainstreamcompaniesandmarketsdo
notservetheBOP,whichconsequentlyincentivizestheemergenceofinformalmarkets.
Mostindividualsdependontheinformalmarketfortheprovisionofgoodsandasasource
ofincome.Subsistenceagricultureisalsoanimportantsourceofincomeforindividualsat
theBOP,butwhatlittleincometheyearnfromagricultureandinformaltradeisunreliable
astheyareoftenexploitedbymiddlemen(IFC,2007).
9
Alongwiththelackofareliablesourceofincome,theBOPhassignificantunmetneeds.
Lackofsanitation,noaccesstoproperhealthcare,andthelackoftransportationand
electricityaresomeexamplesoftheunmetneedsofthispopulation.Itiswidelyknownthat
theBOPissubjecttowhatitoftenreferredtoasthe“povertypenalty.”Servicesandgoods
availabletothemareusuallyofpoorqualityandmoreexpensivethanwhataconsumer
wouldpayinadevelopedmarket(IFC,2012b).Lackofenergyaccessactsasamajor
barrierforpeopleintheBOPtoestablishbetterfoundationsfortheirlives.Anumberof
basicneedscanbemeteasilywithreliableaccesstoenergybuttheenergyaccesschallenge
stillremainsanenormouspuzzlefortheworldtosolve.
Energy Access Challenges TheBOPfacessignificantchallengeswhenitcomestoenergyaccess,buttheextentof
theproblemvariessignificantly.WithintheAmericasalone,while62%oftheBOPinHaiti
lacksaccesstoareliablesourceofpower,only2%oftheBOPinBrazilisnotservedby
reliableelectricity(UNDP,2012).Thegreatestconcentrationsofpopulationswithout
accesstoelectricityareinruralAsiaandSub‐SaharanAfrica,whichaccountfor95%ofthe
totalBOPpopulation.TheInternationalEnergyAgencystatesthatover1.3billionpeople
lackaccesstoelectricity,outofwhich,84%areruralBOPinhabitants(Table2)(IEA,2011).
Table 2. Number and share of people without access to modern energy services in selected countries in 2009 (IEA, 2011) Without access to electricity
Latin America
Developing countries
World
Population
(million)
31
1314
Share of
population
7%
25%
1317
19%
Relying on the traditional use of
biomass for cooking
Population
Share of
(million)
population
85
19%
2662
51%
2662
39%
Lackofaccesstocleanandaffordableenergyexposesthepoortoseverehealth
problemsduetoindoorairpollutionfromburningcookingandlightingfuels.Themost
commonsourceoflightinginunderservedregionsiskerosene‐fueledlampsthatnotonly
failtoproperlylightrooms,butalsohavenegativehealthimpacts.Additionally,traditional
biomasscookstovesarealsoused,aggravatinghealthimpactsonthelivesofthosethatuse
them(IEA,2011).Despitetheirinefficiencyandhealthimpacts,traditionallightingsources
arenotcheapandaloneaccountforapproximately9%ofthetotalBOPhousehold
expenditures(IFC,2007).
Notonlydothesecurrentalternativescausehealthproblems,thelackofaccesstoa
reliablesourceofelectricityalsokeepspeopletrappedinapovertycycle(UNDP,2011).
Usually,peopleintheBOPpaymoreforlessefficiencyenergy,andthishigherenergycost
addsburdenstothepoor.Accesstoreliableenergyimproveslivesinavarietyofways:it
10
increasesproductivitybecausebusinessesareabletostayopenlonger,itfreesuptime
fromactivitiessuchasfuelcollectionthatcanbeallocatedtoincome‐generatingactivities,
anditpermitschildrentostudyatnight.Electricityhelpsincreasesafetyandreduce
violencebyilluminatingdarkandpotentiallyunsafeareas;itreduceshealthproblems
associatedwiththeuseofkerosene‐fueledlamps;andfinally,itcontributestocommunity
mobilizationandtheempowermentofwomenthroughentrepreneurialactivities,suchas
sellinglanterns.Allthesearepositiveimpactsthatresultfromincreasingaccessto
affordablesourcesofcleanenergy. Energy Solutions for the Base of the Pyramid InordertomeettheneedforenergyattheBOP,manyprivateandpublicsector
institutionshavebeeninvestingininnovativeapproachestoimproveaccess.Oneofthe
biggestchallengestoprovidereliableenergytotheBOPstemsfromthefactthatmostBOP
communitiesaredistantfromurbanareas.Expandinggridconnectionstoreachthese
remote,un‐electrifiedcommunitiescanbechallengingintermsofhighinfrastructurecosts
andgeographicallimitations.Furthermore,eveniftheprojectcanbedeveloped,oftenthe
recipientsofgrid‐poweraretoopoortopayelectricityratesthatcansupportthe
maintenanceoftheinfrastructure.Off‐grid,decentralizedsolutionsareincreasinglygetting
attentionfortheirpotentialinpoweringBOPcommunitiesaroundtheworldusing
hydropower,solarphotovoltaics(PV),biomass,andwindasenergysources(UNDP,2013).
Amongtheavailablesolutions,theuseofPV‐basedoptionshasbeenontherise.In
thelastfewyears,PVtechnology’sdiminishingcostandrisingefficiencyhasmadeitmore
appealingasanenergysolutionfortheBOP(IFC,2010;TheEconomist,2012).The
disseminationofthesedecentralizedenergysolutionsispossibleduetotherelativelysmall
requiredinvestment.Otherfactorshavealsodriventheadoptionofthesetechnologies:the
increasingpriceofpetroleum‐basedlightingfuelslikekerosene,andtheincreasedaccess
tomobiletechnologyfortheBOP,particularlyinAfrica(IFC,2010).Thesesystemshave
alsopermittedthedevelopmentofmarket‐basedapproachesthathavebeenincreasingly
substitutingfortraditionalproducthandoutmodels(ARE,2011).
ThesolarPVsystemscategoryiscomprisedofdifferentsolutionsthatvaryinsizeto
meetdifferentpowerdemands.Twoexamplescommonlyadoptedtoaddresstheenergy
accesschallengeattheBOParesolarhomesystems(SHSs)andsolarlanterns(ARE,2011).
SHSs(Figure2)havebeenthemostwidelyadoptedsolarsolutionoverthepastthirty
years.Theyarecomprisedofsolarmodules,achargecontroller,batteriesandwiringfor
localpowerdistribution.LargerSHSscanalsoincludeaninverterwhichprovidesAC
currentfortypicalhouseholddevices(ARE,2011).SHSshavesignificantupfrontcostsand
requireend‐userfinancingoptionsfordisseminationinlowincomecommunitiesatthe
BOP.
11
Solarlanterns(Figure3),ontheotherhand,areafastgrowingsolutionfor
providinglightingtohouseholdsattheBOP(IFC,2012b).Thesesystemsarepoweredbya
solarcell,whichcanbeintegratedintoorseparatefromthedesign,andprovide10Wof
powerorless.Furthermore,theycansubstitutekerosenelampswiththeadvantagesof
higherluminosity,fewerhealthproblemsassociatedwiththetoxicfumesfromkerosene
combustion,andatthesametime,provideacost‐freefueltechnologythatrecharges
wheneveritisplaceddirectlyinthesun.Someofthesesolarlanternsalsoincludemobile
chargingcapabilities.Theirincreasingavailabilityataffordablepriceshasmadetheman
idealsolutionforaddressingthelightingneedsofbothurbanslumsandremoterural
populations.Morerecently,thesedeviceshavebeengivenoutaspartofcatastropherelief
operations(WakaWaka,2013c). Figure 2. Solar Home System Figure 3. Solar Portable Light 12
SECTION 2. The Development Challenge in Haiti Country Overview HaitioccupiesonethirdoftheislandofHispaniolalocatedbetweentheCaribbean
SeaandtheNorthAtlanticOceanwithatotalareaof27,750squarekilometers–slightly
largerthanthestateofNewJersey.Withmostofthelandroughandmountainous,only
36%ofHaiti’slandisarableyet38.1%ofHaitiansdependonagriculturalactivitiesfor
living.TheclimateofHaitiistropical,withsomevariationdependingonaltitude.Some
lowlandareasandnorthernandeasternslopesofmountainsgetmorerainthroughoutthe
yearcomparedtootherareas.TherearetworainyseasonsinHaiti,fromApriltoJuneand
fromOctobertoNovember.Withahighdeforestationrateinthecountry,Haitiisvery
vulnerabletoperiodicdroughtsandfloods.ItstropicallocationalsoendowsHaitiwith
excellentsolarresourcesofaround93millionMWhperyear(OpenEI,2013),butthis
sourceofenergydoesnotyetcontributesignificantlytoHaiti’senergysupply.
Haitihasapopulationofaround10millionwithanannualgrowthrateof1%(CIA,
2013).Morethanhalfofthepopulationisunder25yearsold,givingHaitiaveryyoung
populationstructure(Figure4).ThesexratioofHaitiis1:1,andtheestimated62yearlife
expectancyatbirthforHaitiislowcomparedtoothercountries(2011estimate)(CIA,
2013). Figure 4. Age Structure of Haiti (CIA, 2013) Economic Status HaitiisthepoorestcountryintheAmericasandoneofthepoorestcountriesinthe
world(TheWorldBank,2013).In2012,thecountry’sGDPranked146thintheworldatan
estimated$7.84billion,anditspercapitaGDPwas$1,300andranked208thoutofall228
rankedcountries(CIA,2013;TheWorldBankDatabase,2013).Withonly36.0%arable
13
landcoverage,agriculturecomprisesonly24.7%ofHaiti’sGDP,butoccupies38.1%of
Haiti’slaborforces(CIA,2013).Approximately80%ofHaiti’spopulationlivesbelowthe
povertylinewithincomesoflessthanUS$2perday,and40.6%peopleareunemployed.
LackofeducationisoneofthemajorfactorskeepingHaitifromdevelopingmorequickly.
LessthanhalfofHaitiansoverage15areliterate(48.7%)withfemaleshavingalower
literacyratethanmales(CIA,2013).
OnJanuary12,2010,a7.0magnitudeearthquakehitHaiti,killingupto230,000
people,displacing1.5millionpeoplemore,andincurringeconomicdamagesofaround$8
billion–120%ofHaiti’sGDPatthetime(TheWorldBank,2013).Thedisasterbrought
tremendousdamagetothecountry’salreadyvulnerableeconomy.In2010,Haiti’sannual
GDPgrowthcrashed‐5.4%to$6.63billion.InordertohelpHaitirecoverfromthedamage,
internationalorganizationsstartedhelpingHaitithroughrebuildinginfrastructure,
providingfinancialhelp,andimprovingsocialservices(TheWorldBank,2013).Withthe
economichelpfromoutsidethecountry,Haiti’seconomyrecoveredslowlyfromthe
earthquake,andreacheditshighestgrowthratesincethedisasterof5.6%in2011(Figure
5).Unfortunately,in2012,twohurricanesseverelyaffectedHaiti’sagricultureoutput,
short‐termaidwasrolledbackafterayearofrecovery,andpublicspendingremainedslow
–allwithnegativeimpactsonHaiti’seconomicrecovery(CIA,2013).Followingthese
events,Haiti’sGDPretreatedtoitspre‐earthquakegrowthtrend(2.8%in2012compared
to2.9%in2009).
Hai GDP
9
20
8
15
6
10
5
5
4
3
0
GDP Growth Rate (Annual %)
GDP (Current Billion US$)
7
2
‐5
1
0
‐10
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
GDP
GDP Growth
Figure 5. Haiti’s GDP and Growth Rate from 2004 to 2012 (The World Bank, 2013) 14
Business Environment Haitienjoysalowcostoflaborandtariff‐freeaccesstotheUSformanyofits
exports,however,fromtheperspectiveofattractingbusiness,Haiti’sranks151stinthe
globaleconomicfreedomindex(IndexofEconomicFreedom,2013).Overall,thebusiness
environmentinHaitiremainsburdensome,withgovernmentinstitutionsbeingweakand
inefficient,andcompletingalicensingrequirementtakinguptothreeyears(Indexof
EconomicFreedom,2013).Moreover,inthewakeofthedestructionofthe2010
earthquake,alargeportionoftheworkforceinHaitihasbeenunemployedoroperatesonly
intheinformalmarket.Becauseoftheimportanceoftheinformalmarketitisextremely
difficulttomakeaccurateestimatesofHaiti’seconomicindicators.
InHaiti,foreigninvestmentsareusuallygrantednationaltreatment,butduetothe
inefficiencyofgovernmentinstitutions,theinvestmentregimeremainsinefficient.The
smallfinancialsectorinHaitiisunderdevelopedandlackstheabilitytoprovideadequate
supportfortheprivatesector.Sincemostfinancialtransactionshappenininformalways,
creditlinesfornewbusinessventuresinHaitiremainseverelyconstrained(Indexof
EconomicFreedom,2013).
Energy Infrastructure in Haiti Currently,79%ofHaiti’sinstalledelectricgenerationcapacityispoweredbyfossil
fuelsandtheremaining21%comesfromhydroelectricplants(CIA,2013).AlthoughHaiti
isendowedwithabundantsolarresources,thisenergysourcehasn’tyetsignificantly
contributedtoHaiti’senergysupply.In2008,theHaitianGovernmentformallycommitted
topromotingrenewableenergy,withanationalenergypolicyaimedatgenerating50%of
electricitysupplyusingrenewableenergyby2020(CFI,2013),butthispolicyhasnotyet
resultedinnewenergyprojects.
Haiti’senergymarketisestimatedtobeaUS$0.71billionmarket,oneofthesingle
largestsectorsinthecountry(CFI,2013;UNDP,2012).Withanestimatedannual
populationgrowthrateof1.4%,thismarketisexpectedtocontinueitsgrowth.Despitea
positivegrowthoutlookforenergyinfrastructure,Haiticurrentlyranksasthecountrywith
thelowestlevelofelectrificationintheAmericaswith70%ofitsruralpopulationlacking
accesstoelectricity(IDB,2013b).EveninthecapitalcityPort‐au‐Princeonly45%of
residentshaveaccesstoelectricity.Locallyharvestedbiomassandcharcoalstillremainthe
mostimportantsourceofenergyforhouseholds,andareusedprimarilyforcooking(CFI,
2013).Inruralcommunities,lightingneedsaremetthroughacombinationofkerosene
lanterns,candles,andbattery‐poweredflashlights.
Intheabsenceofmodernelectricityinfrastructure,andwiththehighcostand
feasibilitychallengesassociatedwiththeexpansionofthenationalgrid,alternativeoptions
forpoweringremoteregionshavebeenpromoted.Solarlanternsarebecoming
increasinglyimportantinprovidinginexpensivelightingforpoorareasthatlackaccessto
15
gridpower.Comparedtokerosenelamps,solarlanternscanprovidemorestablelightata
lowercost,preventtheemissionoftoxicfumes,andlowertheriskoffire(Georing,2012).
Purchasingalantern,however,isnotaneasydecisionforafamilyinHaiti
consideringtheupfrontcosttheequipmentrequires.Ananalysisofthepotentialdrivers
thatwouldencouragefamiliestoswitchfromkerosenelampstosolarlanternsisessential
tosuccessfullyestablishingandsustainingasolarlanternbusinessinthelongrun.Afewof
thesefactors,relatedtotheBOP’scurrentsituationinHaiti,areconsideredbelow.
Health & Safety Indoorairpollutionisthebiggestproblemresultingfromkeroseneuseinthehome.
Indoorairpollutionisresponsiblefor2.7%oftheglobaldiseaseburden(WHO).Burning
keroseneproducestoxicfumeswhichcontributestonearlyhalfoftheworld's2million
pneumoniadeathsamongchildreneachyear(Goering,2012).InHaiti,pneumoniaisthe
secondleadingcauseofdeathamongchildrenunderfiveandisalsoresponsiblefor10.8%
oftotaldeathsaccordingtoarecentlypublishedWHOreport(USAID,2013).Additionally,
italsocausesrespiratoryillnessesforwomen,whoonaveragespendmoretimeinthe
homethanmen.Accordingtotheenergyladder(Figure6),anincreasedlevelof
cleanliness,efficiency,anddecreasinghealthimpactsareassociatedwiththeuseofmore
efficientfuels(WHO).Asaresult,healthimpactsareanimportantfactorfavoringsolar
lanternsoverconventionalfuelsinoff‐gridenergyapplications.
Lanternsareusefulforimprovingwomen’ssafetyinrefugeecamps.Rapehasbeen
rampantincampsofthedisplacedfamiliesfollowing2010Haiti’searthquake,butafter
introducinglightstothecampsatnight,thenumberofrapecasesperweekwasreduced.In
addition,lanternsarealsousefulforchildrenandwomentofindtheirwaysafelytopublic
toiletsatnight.Althoughkerosenelanternspresentanalternativeportableoption,they
producetoxicfumesandcaneasilybeknockedover,makingthemunsafe.Accordingto
humanitarianaidvolunteersinHaiti,kerosenepoweredlampsareamajorcauseofburns
amongstudentswhousethemtostudyatnight(Goering,2012).Combiningtheneedfor
portabilityandsafety,solarlanternsprovidebenefitsinboththeserespects. 16
Figure 6: Energy Ladder (Prosperity X Health Impacts)(USAID, 2013) Cell‐phone Usage DespitewidespreadpovertyinHaiti,themobilecoverageratehasincreasedfrom
6.9%to40.5%from2005to2010withanaveragegrowthrateof6.72%peryear(UNdata,
2013).Aftertheearthquake,thankstothereconstructioneffortsandarecovering
economy,cellphoneadoptionratesareaccelerating.Manymodelsofsolarlanternsprovide
theadditionalcapabilityofchargingcellphones.Becauseoftherapidgrowthincellphone
useandthelackofchargingsourcesinmostruralareas,solarlanternswithcharging
capabilitieshaveadditionalappealoverproductsthatofferonlylightingservices.
Case Study: A Field Survey in Fe‐Yo Bien, Haiti Whereasthepreviousparagraphsdiscussthechallengesfacedbythemajorityof
Haiti’spopulation,thepresentsectionexploressimilarissuesfromtheperspectiveof
primaryresearchthatwasconductedbytheMastersTeamintheregionwherethelantern
projectisunderdevelopment:theCentralPlateau.InOctober2013,membersofthe
MastersProjectteammembersmadeatriptocentralHaiticoordinatedbytheproject
clientSELF.Theteamwasabletocollectinvaluableon‐the‐groundinformationregarding
thelivingconditionsandneedsofruralHaitians.Highlightsofobservationscollected
duringthetriparepresentedbelow.
Fe‐YoBienisavillageinthemountainsincentralHaiti.LeavingfromtheCapitalcity
Port‐au‐Prince,ittakesapproximatelytwohoursofdrivingandonehourofhikingtoreach
thevillage.Therearenoproperroadsandnopublictransportationservingthecommunity.
Almostallofthe15,000Fe‐YoBienvillagersliveunderthepovertylineandfallintothe
lowerbracketsoftheBOP.Separatedfromtheouterworldbymountains,peopleinFe‐Yo
Bienstillmaintainanoldfashionedlifestyle,usinghorsesasameansoftransportationand
tradinggoodsinsmall,localmarkets.InFe‐YoBienvillagers’opinions,badroadconditions
17
andlackofaccesstoelectricityareclearlythetwomostimportantproblemsthatthey
wouldliketoseebeingaddressed.
HouseholdsinFe‐YoBiendependheavilyonagricultureforsurvival.Staple
agriculturalcropsinFe‐YoBienincludecorn,millet,potatoes,rice,beans,andbananas.
Mostagriculturalyieldsareconsumeddirectlyratherthansoldataprofit.Ofthe
householdsinterviewedbytheMastersTeam,lessthan50%wereabletosellsomeoftheir
yieldforafewdollars,andonlyonehousehold,whichbelongedtothepastorofFe‐YoBien,
wasabletoearnincomefromsellingmostoftheharvest.Formorethan50%ofthe
interviewedhouseholds,sellingcropsistheonlywayforthemtoearnincome.Because
mostfarmersdependoninconsistentrainfallforirrigation,theamountofmoneyavailable
formanyFe‐YoBienhouseholdsvariesdrasticallyfromseasontoseason.
FoodsecurityisaseriousproblemforinhabitantsofFe‐YoBienandsurrounding
areas.Manyfamiliesreportedeatingnomorethanonemealperdayintheirhousehold,
althoughaminorityofintervieweesatetwotothreemeals.Whenaskedaboutthetypesof
foodconsumed,itwasclearthatmillet,corn,andricecomprisedthebulkofthelocaldiet.
Fruitsandvegetables–requiringirrigation–wereperceivedasluxuryitemsonly
purchasedonceortwiceperweekorevenmonth.Meatconsumptionwasevenrarer,with
veryfewfamiliesconsumingchickenmorethantwicepermonth.
Water,shelter,sanitation,healthcareandeducationallposeextremechallengesfor
villagers.Almostallwaterisdrawnfromanearbyriver,whichalsoservesasthepublic
bathandareaforwashinglaundry.Asaconsequence,choleraoutbreaksandotherwater‐
bornediseasesarecommon,andwomenandchildrenmustspendbetweenfifteenminutes
andanhourperdayhaulingwater,dependingonthelocationofthehouseholdrelativeto
theriver.Sanitationismostlylackinginthevillage,exacerbatingtheriskofcontamination
ofthewatersource.Forhealthcareandeducationbeyondmiddleschool,villagersmust
traveltoBoucanCarre,theclosesttownconnectedtothenationalroadsystem.Thehiketo
andfromthetowntakesanhour,andcanbecompletelyimpassibleduringtherainyseason
whentheriver,whichmustbecrossedtwiceoverthecourseofthehike,overflowsits
banks.Makingmattersworse,choleraandotherwaterbornediseaseoutbreaksaremost
commonduringtherainyseasonwhentheroadbecomesverydifficulttonavigate.
AsFe‐YoBieniscompletelyunelectrified,localsdependmostlyonkerosene,wood
andcharcoalasenergysources.Batteriesareavailablebutarenotaffordableforeveryone.
Mostoftheinterviewedhouseholdsusekerosenelampsandcandlesastheirprimary
sourceoflight,withlessthan40%ofhouseholdsusingflashlightsoccasionally.Atnight,
theyuselightforlessthan3hourswithsomehouseholdsnotusinganylightatall.Children
donothaveasteadysourceoflightingforstudyingatnight:someonlystudyduringthe
daytime,somestudybythepoorlightofkerosenelampsorcandles,whilesomehavetogo
outandstudyunderoneofthetwosolarstreetlampsthatwererecentlyinstalledinthe
community.Weeklyenergyexpenditures(excludingtransportationexpenditures)ofthe
18
interviewedhouseholdsvariedfrom$2Haitiandollars(equivalenttoUS22cents)to$183
Haitiandollars(equivalenttoroughlyUS$20).Morethan50%ofhouseholdsspendless
than$10Haitiandollars(US$1.11)perweekpurchasingkerosene,woodorcharcoal,
candles,andbatteries,combined,forenergyusage.Cellphonesarerelativelyprevalentin
Fe‐YoBien,with62%ofhouseholdsowningatleastonecellphone.Chargingcellphones
hasbeenaproblemforFe‐YoBienvillagers.UsuallytheymusttraveltoBoucanCarreand
payforphonechargingservicesoncetheyarrive.
Solarlanternsusesolarenergyasanenergysourceandthusdonotincurcosts
beyondtheupfrontcostofthelantern.Facinghugechallengesofgettingreliableand
affordablesourcesoflighting,allinterviewedhouseholdsexpressedinterestinsolar
lanterns.Surprisingly,morethanhalfofthehouseholdshadalreadyheardofsolarlanterns
andoneofthehouseholdsevenownedasolarcellphonecharger.Theproblemofpaying
forsolarlanterns,whichretailforanaverageofUS$15,forFe‐YoBienvillagersstill
remains,eveniftheywerelocallyavailableforpurchase.Wealthierhouseholdsdohave
extramoneyforthisnewtechnology,butforthemajorityofpoorhouseholds,despitethe
factthattheyareinterestedinsolartechnology,theamountofmoneytheycouldaffordand
wouldbewillingtopayisunclear.Thefollowingsectionpresentstheresultsofa
comprehensivewillingness‐to‐paystudyrecentlyconductedinHaiti.Giventheimportance
ofaffordabilityforprojectsuccess,thestudyhasimmediaterelevancetotheSELFsolar
lanternproject.
Willingness‐to‐Pay Study for Electricity Access in Haiti Inpreparationforalarge‐scaleelectrificationprojectonHaiti’ssoutherncoast,also
inpartnershipwiththeIDB,SELFjoinedforceswithNRECAInternationalLtd.(NRECA),the
UNEP,andvariousotherorganizationstoconductawillingness‐to‐pay(WTP)surveyof
householdsandbusinesses.Thesurveywasconductedoveraperiodoffivedayswitha
totalof339householdsand126businesses.Inthisreport,thebusinessdataisomitted
giventhefocusoftheMastersProjectonruralhouseholds(HREC,2014).
Respondentswereaskedavarietyofquestionspertainingtotheuseofdifferent
fuelsandenergytechnologies,aswellastheregularcostsassociatedwiththoseoptions.
Noneoftherespondentswereconnectedtothenationalgrid,althoughsomereported
havingaccesstoaprivategenerator.WTPdatawas“revealed”ratherthanreported
directly–thatis,ratherthanreportinghowmuchtheywouldpayforenergyinamonth,
respondentswereaskedtocalculatetheirmonthlyexpendituresbyaccountingforallfuels
andenergyservicespurchasedinthattimeframe.Accordingtothedesignersofthesurvey,
revealedWTPismorereliablethanreportedWTPbecauseitreflectscurrentexpenditures
ratherthanestimationsofwillingnesstopurchaseservicesthatareyetunknownto
respondents.
19
ConsistentwithdatacollectedbytheMastersTeaminFe‐YoBien,93%of
respondinghouseholdsreliedonkerosenefortheirlightingneeds,spendinganaverageof
US$15permonthontenlitersoffuel.Batteriescameinsecond,with51%ofhouseholds
purchasingthemregularly,followedcloselybycandlesat47%.Themostcrucialtake‐away
ofthesurveyforthepurposesofthisMastersProjectistheWTPdatathatemergedfrom
thestudy(Table3).
Table 3. Willingness‐to‐Pay Study Result Percentage of sampled Households
90%
80%
70%
50%
25%
5%
Monthly WTP
(USD)
$3.62
$5.51
$6.75
$10.82
$20.56
$105.63
Monthly WTP
(Gourde)
HTG 156
HTG 237
HTG 290
HTG 465
HTG 884
HTG 4556
ThesenumbersarehigherthanthosecollectedinthelimitedsurveyinFe‐YoBien,
butnotsomuchsotosuggestthatthesurveyedpopulationislivingundersignificantly
differenteconomiccircumstances.UnderstandingWTPiscrucialtogaugingthepotential
successorfailureofasolarlanternprojectthatwillrelyonvoluntarypurchasesbyrural
households.Itisencouragingthatover50%ofrespondentsalreadyspendmorethanUS
$10permonthonenergy,becausethismeansthataUS$15lanterncouldbepurchased
withlessthantwomonthsofenergyexpenditures.
20
SECTION 3. A Business Model Approach to Lantern Distribution A Business Approach to Lantern Distribution Traditionalapproachestodevelopmenthaveemphasizedleveragingphilanthropic
dollarsorgovernmentprogramstoimprovelivingconditionsfortheworld’spoor.Overthe
pastdecade,therehasbeenanupswingindialoguebetweenthedevelopmentcommunity
andthebusinesscommunityresultingineachfieldlearningvaluablelessonsfromthe
other.Themovementtoexploredevelopmentissuesusingthetoolsofbusinessis
exemplifiedintheworkofC.K.Prahalad,lateprofessorofbusinessstrategyatthe
UniversityofMichigan.In2002,inTheFortuneattheBottomofthePyramid,Prahaladand
StuartHartlaidthefoundationforanapproachtopovertyalleviationthatreframedthe
world’spoorestpeopleasrationalconsumersworthyofconsiderationfromsocially‐driven
orevenmainstreambusinesses,ratherthanvictimsinneedofassistance(Prahalad&Hart,
2002).Thisapproach–claimitsproponents–notonlyhasthepotentialtorevolutionize
traditionallyunderdevelopedregionsbyprovidingindividualswithusefulproductsand
services,butcanalsoopenupnewmarketsforcorporationsfacingstiffcompetitionand
flatgrowthindevelopedeconomies.
Whilenottakingonesideoranotherofthedebateoverdevelopmentstrategiesin
general,thisMastersProjectdoesrecognizethatnumerousinnovativecompaniesand
organizationsemployingthetoolsofbusinesshavebeenhighlysuccessfulatexpanding
energyaccesstotheBOPoverthepasttenyears.Ourteambelievesthatthemostfruitful
applicationofthefundingfortheSELFlanternsprojectwillbetoestablishaprogramthat
canbesustainedindefinitelybygeneratingasteadystreamofbenefitsforallinvolved
parties.Forthisreason,theformatofthissectionandtheprojectpresentedinChapterII
takesanexplicitlybusiness‐basedapproachtothequestionofexpandingenergyaccess.
Beforeengaginginourownattempttodesignafinanciallysustainablelanterndistribution
network,theMastersTeamassiduouslystudiedexamplesofexistinglanternbusinesses
fromaroundtheworld.TheInternationalFinanceCorporation’sLightingAfricaprogram
highlightsmanyofthesesuccesses,aswellasthebarrierspreventingfurtherexpansionof
currentefforts.Thefollowingtopicsexplorethebarriersthatarerelevanttolantern
distributioninHaitiandpossiblesolutionsforovercomingthem.
Barriers to Success Market Barrier #1. Access to Finance Accesstofinanceremainsoneofthelargestbarriersonthepathtosettingupa
sustainablesolarlanternbusiness(IFC,2012b).Thereareanumberofsignificant
differencesbetweenthesolarlanternmarketandconventionalgoodsmarket.TheBOP
requiresatailoredfinancialsolutionbecauseoftheinherentvariabilityoftheend‐user’s
income,andthelowincomebracketstowhichthelanternmarketcaters.Alargemajority
21
oflanterncustomersspendanywherebetweenUS$1.25and$8.5permonthontraditional
energy,largelybiomass(IFC,2012a).GiventhatthemediancostofasolarlanternisUS
$15,withoutfinancingsomeconsumersareunabletoaffordlanternsduetheirhigh
upfrontcostrelativetotheirincomes(IFC,2012b).
Currently,thesolarlanternmarketprimarilyservesruralpopulationsinIndia,
Africa,SouthAsia,andotherselectregions.Althoughlanternshavethecapabilitytoserve
bothurbanandruralareas,mostsolarlanterninitiatives(bothforprofitandnon‐profit)
areconcentratedinruralareas,wherepopulationshavelittleornogridconnectivityand
littleambientlightatnight.Sincemostoftheseruralareasareremote,customerstypically
havelimitedaccesstofinancialinstitutions.Solarlanternsalsorequireasignificantamount
ofafter‐salessupport.Thismakescoordinationofaftersalesserviceandmaintenance
extremelydifficult,whichcanimpacttheeffectivenessofend‐userfinancingrepaymentifa
productfailsduetomisuseorlackofarepairnetwork.
End‐userfinancingisoneofthesolarlanternmarket’slargestentrybarriers.As
discussedinthesectionabove,end‐userfinancingischallengingbecauseofcharacteristics
intrinsictotheBOPmarket,includingtheremotenessandincomebracketsofthe
consumersbelongingtoit.Whilesomeinterestingprojectsareunderwaytoaddressthe
end‐userfinancingchallenge,theavailabilityoffinancingschemesforend‐usersis
currentlylowandsuffersfromlimitedsupportfromtheentirelanternecosystem–
manufacturers,distributors,andtheformalfinancialsector(IFC,2012b).Thefollowing
sectionsoutlinetheexistingmechanismsforend‐userfinancinginthesolarlanternmarket.
Microfinance Institution Micro‐Lending Microfinanceinstitution(MFI)‐basedmicro‐lendingisoneofthemostcommon
formsofend‐userfinancingmechanisms,withorganizationslikeSELCOandNuruall
employingsomeformofMFI‐sponsoredend‐userfinancing.MFImicro‐lendingisan
excellentmechanismtohelpconsumersfinancetheirsolarlanternsandotherdevicesasit
hasthepotentialtofillinthevoidsthatconventionalfinancialinstitutionsareunableto
cover.Sinceruralbanksaregenerallylocatedadjacenttotheremoteareaslanternmarkets
typicallyserve,theyhaveasignificantamountofpenetrationintheseareas.MFIsarealso
typicallymorefamiliarwithlocalincomelevelsandhaveabetterfeelforthefunding
landscape.Thispotentiallytranslatesintolowerinterestloansandmoreflexibilityinloan
agreements.However,therearealsoafewdisadvantagesassociatedwiththistypeof
financing.Sinceloanamountsforlanternswillbeontheorderof$100orless,therewillbe
alargetransactioncostrelativetotheactualamountoftheloan.MFIsalsohavelimited
fundingandassociatedconstraints,andthismayrestricttheamountofloansdisbursed
(IFC,2012b).
Despitethesechallenges,MFIscouldstillbeusedtofinancesolarlanterns,
especiallyiftheloanamountisincreased.MFIscouldnarrowtheirscopetocustomerswho
alreadyhaveoutstandingloansandsimplyaddthecostofthelanternstotheoutstanding
22
balance.Inmicrofinance,thisisknownas“toppingup.”Thismethodwouldavoid
transactioncostscreatedbyanewloan,andthesamepaymentplancouldthenbe
extendedtoincludetheadditionalcostofthesolarlantern.Thismethodalsoensuresthat
allcustomershavesomesortofbackgroundcheckandacceptablecredithistorytopayoff
thelanternloan.MFIscouldprovidefinancingforalanternandacomplementaryproduct–
suchasacleancookstove,waterpurifierorcellphonecharger–toraisethecombinedloan
sizetoaviableamount,whichwouldmeanthattransactioncostsareintunewiththeloan
size.Forexample,theSelf‐EmployedWomen’sAssociation(SEWA)haspartneredwithIFC
toprovidesolarstovesandlanternstoits200,000ruralwomenmembersinthewestern
IndianstateofGujarat.SEWAprovidesitsmemberswithloansofUS$100‐150topurchase
thebundledoffering,ata16%interestrate,repayableinmanageablemonthlyinstallments
(IFC,2012b).
Engaging the Semi‐Formal and Informal Financial Sector
Thereexistsanextensiveinformalandsemiformalfinancingnetworkinruralareas
aroundtheworld.Itmaybeworthwhiletointegratethesefinancialframeworksinto
financingframeworkforsolarlanterns,becauseoftheirproximitytothemarketitself.
TheseorganizationsincludeSavingsandCreditCooperativeOrganizations(SACCOs),
VillageSavingsLoanAssociations(VSLAs),AccumulatingSavingsandCreditAssociations
(ASCAs),andRotatingSavingsandCreditAssociation(ROSCAs).Theyhaveseveral
advantagesoverthemoreformalinstitutionssuchasMFIsandbanks.Sincetheyareco‐
locatedwiththemarket,theyhavepotentialtoachievehighmarketpenetration.The
formalandsemiformalfinancingnetworksmayalsohaveahigherappetiteforriskgiven
theircommunity‐focusedoperations.Thesenetworksmayalsoshowahigherwillingness
toprovideloansforproductsthatimprovethestandardoflivinginruralareas(IFC,
2012b).Discussionswithstakeholdershaverevealedthatitisdifficulttoconvince
conventionalfinancialinstitutionstoinvestinloansforproductslikelanterns,andthis
representsatangibleopportunityforthemoreinformalfinancingmechanismstohavean
edgeoverbanks.
Mobile Lending Schemes
Mobilelendingforsolarlanternfinancingisapromisingalternativethatcouldbreak
freeofthecurrenttransactioncostconstraintsonlending.MFIsandotherfinancial
institutionscanusemobilepayment(“m‐payment”)platformstodistributecreditand
collectrepayments,therebyreducingtheirtransactioncostsbyover50%(IFC,2012b).
Othernon‐financialinstitutionscoulddevelop“pay‐as‐you‐go”energybusinessmodels
enabledbyanm‐paymentplatform.Thismethodisgainingpopularitywithseveralstart‐up
businessesthatareutilizingtechnologytoreducethetransactionsizeoftheirenergy
product/offering,allowingconsumerstopayforonedayofenergyatatime.M‐Pesa,a
mobilebankingandcashtransferserviceofferedbySafaricomisanexampleofamobile
23
bankingsystemusedinKenyathatcouldpotentiallybeusedforsellinglanternsaswell.
AccordingtoasurveyconductedinKenya,48%ofshopkeepersuseM‐Pesa,oranother
mobilebankingsystemeithertosellproductsortobuyproductsfromtheirdistributors
(IFC,2013).
Inpay‐as‐you‐gomobilelendingschemes,customersinitiallypurchaseascratch
cardofasmallvaluesuchasUS$1or$2fromapartneringretailer/distributor.Thescratch
cardisvalidatedbyatextmessage,andthisprovidesthecustomeraccesstothesolar
lanternforaspecifiedtimeperiod.Oncethecreditisexhausted,accesstothedeviceis
barredandtheconsumermustpurchaseanotherscratchcardforaccess.Thissystem
providesaccesstoeventhepoorestofconsumersbecauseoftheflexibilityinthecredit
amount.Themobileplatformalsoconsiderablyreducesupfrontcosts(IFC,2012b).
Payroll Financing
Thepayrollfinancingconceptrevolvesaroundalargeemployerpartneringwitha
reputablelanterndistributorandfinancialinstitutiontoprovideitsemployeeswith
lanternsandrelatedfinancing(IFC,2012b).Payrollfinancingmandatesatieupwitha
largeorganization,andsecuringsuchatiemaynotbeeasy.
ApayrollfinancingschemeforlanterndistributionwasimplementedintheIndian
stateofAndhraPradesh,throughitsstate‐ownedroadtransportationcompany.Andhra
PradeshisastateinIndiathathasalargeruralpopulationandthepotentialtobethe
customerbaseforthesolarlanternmarket.TheAPStateRoadTransportCorporationhas
morethanamillionemployees,fromfairlyruralareas.Solarlanternswereprovidedto
them,andthecostofthelanternwascollectedthroughmonthlydeductionsfromtheir
salaries.Thelanterns,whichcostUS$44‐$66attheproject’sinceptionin2004‐2005,were
madeavailableonequalmonthlyinstallmentsoveraperiodofonetotwoyears.The
employerensuredrepaymentofthecosttothemanufacturer,bywayofamemorandumof
understanding(MOU),andthemanufacturerpromisedtoprovideadequateservicing
duringandaftertheloanperiodaspartofthecontract(IFC,2012b).
Market Barrier #2. Distribution Challenges
Evenintheabsenceofend‐userfinancingdifficulties,thelogisticsofgettingsolar
lanternsintothehandsofruralcustomerscanbeaprohibitivechallenge.Thetarget
customersforsolarlanternsaretypicallylocatedinlast‐milecommunitiesfarbeyondthe
reachesofnationalroadnetworks.Manyofthesecommunitiesareonlyaccessibleby
motorcycle,horseback,orbyfoot,meaningthatgoodsmustbetransportedinsmall
quantities.Eachadditionallinkinadistributionchainaddsrisk,cost,andtimetothe
deliveryofashipmentatitsfinaldestination.Theresultofthissituationisthatend‐users
oftenpaya“povertypenalty”(IFC,2012b)forpurchasedgoods:apremiumabovenational
averagecoststhattraderschargeruralconsumers.Lanterndistributorsarenotimmuneto
costescalationsresultingfromruraldistribution.AccordingtotheIFC’sLightingAfrica
24
report(IFC,2012b),distributioncostscanaccountfor25‐50%oftheend‐user’spricefora
solarlantern.
Toestablishsuccessfuldistributionnetworks,organizationsmustidentifyregions
withlowratesofelectrification,gainanunderstandingofhowgoodscurrentlytravelin
andoutofremotecommunities,anddesignadistributionsystemthatmaximizesexisting
resources.Forlanternstoremainwithinthepurchasingpowerofend‐users,thesetasks
mustbeaccomplishedwithaminimalimpactontheretailcost.Inrecentyears,two
industrieshavebeenoverwhelminglysuccessfulatscalingdistributionnetworksinremote
regionsofdevelopingcountries:telecommunicationsandsoftdrinks.Tobetterunderstand
thechallengesofdistributingsolarlanterns,abriefoverviewofthesetwomodelsis
warranted.
Coca‐Colahassucceededingeneratingahighlevelofdemandforitsproductsin
ruralareasaroundtheworld,andhasbeenabletocreateadistributionnetworkthatcan
supplythatdemand.InWestandCentralAfrica,softdrinksarebottledinacentralhub–
typicallytheprimaryeconomiccenterofthecountry–anddispatchedtoremoteregionsin
progressivelysmallerquantitiesandvehicles.Ultimately,cratescarrying24bottleseach
arriveinsmallvillagesstrappedtothebackseatsofmotorcycles,whichalsocarry
passengersandotherconsumergoods.Thelocaltraderthatplacedtheorderpaysforthe
crateplusasmallpaymenttothemotorcycledriverforthetransportation.Thefullcrateis
exchangedforacratecontainingemptybottles,whicheventuallymakesitswaybacktothe
bottlingfacilityforrefilling.Thiscircularflowofbottlesandcratesisacrucialelementin
minimizingdistributioncosts.Coca‐Colaalsobenefitsfromitssuccessinleveragingmicro‐
entrepreneurs1fromthemomenttheproductleavesthebottlingfacility:urban
distributors,transporters,andruralmerchantsallearnahumbleincomebyfacilitatingthe
distributionofsoftdrinkstosomeofthemostremotecommunitiesinthecontinent.
Insub‐SaharanAfrica,cellphoneownershiphasrisen30%peryearsince2001,
risingtoatotalrateofcellphoneusageof60%oftheAfricanpopulationby2011(Mitullah
&Kamau,2013).Telecommunicationcompanieshaveadoptedadifferentstrategytoreach
theircustomersonalargescale.Inexpensiveorusedphonesaregenerallypurchased
withoutcommunicationplansinlargerurbanhubs.Tosellcredit,telecomcompanies
operatenetworksofproprietarykioskssellingrefillcardsandotherservices,suchascell
phonecharging.Kiosksmayeitherbeownedbythetelecomcompany,oraresometimes
operatedbyindependententrepreneurs.Becauseoftheirsmallsize,refillcardsareeasily
1“Micro‐entrepreneur”isatermcommonlyusedintheBOPfieldtodesignateanindividualwhoearnsa
livingbysellingproductstoruralconsumers.Networksofsuchentrepreneursoftenformthebackboneof
ruraldistributionbusinessmodels,becauseinmanyareasbrickandmortarstoresarenotavailableand
wouldleadtoahighermarkuponproductsduetothehigherassociatedoverhead.Micro‐entrepreneursare
mobile,havepersonalrelationshipswiththeareastheyserve,andalsoareabletocommunicatewith
internationalorganizationstoplaceorders,providesalesreports,andsometimesperformotherservices,
suchasproductrepair.
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transportedtoruralmarkethubs,wherelast‐milecustomerstraveltopurchaseproducts
thatareunavailableintheirremotecommunities.
Inbothofthepreviousexamples,companieshavefoundsolutionsthatovercome
thechallengesofremotedistributionwithoutmakingthecostoftheirproductsexcessive
fortheend‐user.Unfortunately,neithermodelisentirelyreplicablebylanterndistributors.
Eachproductrequiresatailoredsolutionthataccountsforthelevelofdemand,costofthe
product,sizeandweightoftheproduct,andconsumerawareness.AlthoughtheCoca‐Cola
modelofmotorbikedistributioncouldtheoreticallyworkforlanterns,theymustbe
accompaniedbyaneducationalcampaignthatdemonstratestheirusefulnesstotheend‐
user.Itisthispairingofmarketing/consumerawarenesswithproductdistributionthat
makessolarlanterndistributionparticularlychallenging.
Foroperationstobefinanciallysustainable,mostorganizationsusecombinationsof
multiplestrategiestoachievescaleddistribution.Asurveyof20lanternmanufacturers
revealedsixdifferentdistributionstrategies:1)distributornetworks:themanufacturer
sellsdirectlytomajordistributors,whotakechargeofalldownstreamdistribution(75%of
manufacturersemployedthismodel),2)manufacturer‐ownedretailoutlets(45%),3)
MFI/NGOpartnerships:themanufacturerworkswithapartnerwithextensivelocal
experiencetodistributelanterns(40%),4)institutionalpartnerships(25%),5)micro‐
franchising(25%),and6)arentalsystem,whereuserspayforusingthelanterns,butdo
notownthem(15%)(IFC,2012b).Distributor‐basednetworksarethemostcommon
strategy,becauseifdistributorsthatalreadyoperateatscaleinacountryexist,theycan
reachalargenumberofcustomersthroughestablishedoutlets.Thismodelisnotalways
possible,however,asdistributorsofothergoodsmaynotyetexistatscaleinruralareas,
theymaynotbewillingtocarrylanterns,ortheymaynotbeablefinancelargeordersof
relativelyexpensivelanterns.Proprietaryoutletsensurethatlanternswillbeaccompanied
byqualifiedconsumereducation,butsuchnetworksarealsomoretimeconsumingand
costlytoestablish.Manufacturersalsocommonlypartnerwithnon‐profitorganizationsor
branchesofgovernmenttoreachruralcustomers.Suchmission‐drivenorganizationsoften
haveestablishednetworksinruralareasthatcanbeleveragedforlanterndistribution.
Inallcaseswheredistributionhasbeensuccessful,thedistributionorganization
mustidentifytheleastexpensivemeansofreachingthegreatestnumberofcustomers
possible.Itmustcarefullyconsiderallpartnersinvolvedinthenetworkandensurethat
incentivesarealignedtosustainthepartnership.Thedesignofthedistributionnetwork
alsohasimportantimplicationsforotherimportantaspectsofmaintainingasustainable
lanternbusiness:organizationsmustconsiderhowproductdistributionwillbepairedwith
consumereducation,andhowtheywillcoordinateafter‐salesserviceandrepairs.
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Market Barrier #3. Consumer Awareness
Consumerawarenessisanimportantdeterminantofsuccessforanysolarlantern
initiative.Manypotentialconsumersareunawareofqualitysolar‐poweredlighting
productsandthebenefitstheyprovide.Amongthosewhoareawareoftheproducts,there
aremanymisconceptionsthatincludelanternsbeingmoreexpensivethankeroseneand
biomasslighting,whichisnotthecase(IFC,2012b).Awarenesscampaignstherefore
becomevitaltoconvincecustomersthattheyarebuyingbetterlightingthatwillimprove
thequalityoftheirlivesinacosteffectivemanner.Thereareanumberofwaystochannel
marketinginitiatives.Wordofmouthremainsoneofthestrongestwaystogenerate
consumerawareness.ThisapproachhasbeenusedbyGreenlightPlanetbymakingvillage
entrepreneurscalledsaathismarkettheirproducts.Thesaathiisalwaysalocal,andhe
marketsanddistributesthelanterns.Leveragingpubliccampaignsisalsoanefficientway
tomarketyourproducts.Providingwarrantiesmayalsobeamechanismtoincrease
consumerawarenessaboutyourproduct(IFC,2012b).Asthelanternmarketmatures,
marketingandconsumerawarenesswillhaveabiggerroletoplay.WithlargeMNCs
comingtotheforefront,withlargeinvestmentsinandteamsdedicatedtomarketingand
consumerresearch,thefocuswillshifttobrand‐buildinginsteadofproductfamiliarization.
Market Barrier #4. Poor Product Quality & Market Spoilage
ThevastmajorityofsolarlanternsaremanufacturedineitherChina(67%)orIndia
(14%)andproductsfromthesetwocountriesaccountforover90%ofglobalsolarlantern
sales(Figure7).Chinaisinvolvedmorethanstrictlyasamanufacturer:approximatelyhalf
ofthecompaniesmanufacturinglanternsinChinahavetheirheadquartersthereaswell.In
principle,thereisnodownsidetoChina‐basedmanufacturing–indeedsomeofthehighest
qualitylanterncompaniessourcetheirproductsthere–butinthepast,somemarketshave
beenfloodedbycheapproductsmadebyChinesecompanies(IFC,2012b).Whilepoor
qualityproductsmaybeaffordableforpoorpopulations,theinferiorqualityultimately
leadstocustomermistrustofallsolarlanterns:aphenomenonknownas“marketspoilage.”
Amarketisparticularlypronetospoilageifcustomersareunfamiliarwithaproduct,asis
oftenthecasewithsolarlanterns.Thus,iftheyoranacquaintancehasabadexperience
withalantern,itmaytainttheirimpressionofalllanterns,notstrictlythedefectivemodel.
Untilamarketmatures,consumersmaynotbeabletodifferentiatebetweenlowquality
andhighqualitygoods,andthereforetheperformanceofoneproductwillaffectthe
reputationofallothers.
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Figure 7. Pico‐lighting Systems Manufacturing (IFC, 2012b)
Amajorchallengeintheglobalsolarlanternmarketisthelackofauniform
standardthatcouldbeusedbynationalgovernmentstodirectpreferentialtreatment,orby
organizationstodeterminewhichproductsaremostsuitableforlargescaledistributionin
ruralareas.Sinceitslaunchin2007,theIFC’sLightingGlobalprogramhassoughtto
combatmarketspoilagebyraisingconsumerawarenessandthroughthepromotionofa
qualitycertificationprogram,wherebymanufacturersmayvoluntarilysubmitproductsfor
testing.Productsaretestedonthebasisofdurability,batterylongevity,solarpanelquality,
andtruthofadvertising(IFC,2012b).Asoftheendof2012,46modelshadachievedthe
qualityverificationstandardandquality‐verifiedsaleshadrisento37%ofallsalesin
Africafromonly6%in2009.
Whenenteringanewmarket,lanterndistributorsmusttakestockofrural
consumers’priorexperienceswithsolarlanternstoassesswhetherthemarkethasbeen
spoiledbylowqualitygoods.Also,evenifanorganizationdistributesahighquality
product,theymustbecarefultopairtheirdistributioneffortswithconsumereducation
andafter‐salesservicetoensureproperproductusage.Whereorganizationshavefailedto
educateconsumersinthepast,studieshaveshownthatusersthatareunfamiliarwithsolar
technologyhavefailedtoproperlyorientthesolarpaneltowardthesun,resultinginpoor
performance.Inotherinstances,batterieshavebeenremovedfromsolarlanternsinan
attempttopowerotherappliancesorbechargedfromothersources,suchasmotorcycle
engines(WRI,2010).Itisimportanttokeepinmindthattheperceptionofaproduct’s
qualitydependsasmuchontheavailabilityofconsumereducationandrepairsasitdoes
onthemanufacturingqualityoftheproduct.
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Market Barrier #5. Policy Challenges
Nationalgovernmentsinfluencemostmarketsinanumberofways,someofthem
positiveforagivenindustry,someofthemnegative.Solarlanternsarenoexception.
Ideally,governmentschoosepoliciesthatmakelifeeasierforamajorityofacountry’s
inhabitants.Intheenergysectorinemergingeconomies,thisoftenmeansproviding
subsidiesforcommonlyusedfuels,suchaskerosene,subsidizingthecostofcapitalfor
energyinfrastructuredevelopment,orimposingimporttariffsandtaxesonforeigngoods
tosupportlocalenterprise(WRI,2010).Non‐profitanddevelopmentorganizationsalso
influenceenergymarketsbyraisingawarenessofnewtechnologyandbydistributing
subsidizedorfreeproducts.Finally,companiesinfluencemarketsbylobbying
governmentstochangepoliciesintheirfavor.
Themostdirectpolicyimpactonsolarlanternscomesintheformofimporttariffs
andtaxes.ArecentIFCreportdrawsattentiontothefactthattariffandtaxationpoliciesin
manycountriesarehostiletoemergingrenewabletechnologiesinfavorofconventional
fuels(IFC,2012a).Forexample,inWestAfrica,importtariffsonsolarlanternscanrange
from5‐30%,andwhencombinedwithtaxes,cancompriseuptohalfofthecostpaidbythe
end‐user.Malawichargesaflat50%importtariffonsolarpanels,andIndiaandCambodia
alsochargesteepdutiesonsolarproducts(IFC,2012a).Theseconditionsaddconsiderable
challengestoaffordablelanterndistribution.Incertaincountries,governmentsarerevising
theirpoliciesrelatedtorenewableenergyinrecognitionofthepotentialbenefitsthat
renewabletechnologycanhaveforoff‐gridcommunitiesandforthenaturalenvironment.
KenyaandTanzaniahavebothmadeprogresstowardeliminatingdiscriminatorytariffson
solarproductimports,whichhaspartiallycontributedtotherapidexpansionofsolar
lanternmarketsinEastAfrica(IFC,2012b).
Twootherprogramsthatostensiblyfavorthepoorultimatelyharmthemby
distortingsolarlanternmarkets:thefirstisthepracticeinmanycountriesofsubsidizing
kerosene,whichistheprimaryalternativesourceoflightingformostun‐electrified
communities(WRI,2010),andthesecondaregiveawayprogramsledbygovernmentsor
non‐profits.InIndia,kerosenesubsidiessignificantlymaskthetruecostofthenon‐
renewablealternativetosolarlanterns,therebyartificiallydiminishingdemand.Non‐
profits,seekingtoquicklyachievetheirdistributiongoals,occasionallygiveawaylanterns
athighlysubsidizedratesorentirelyfreeofcharge.Whilethismayhelpachievelarge‐scale
distributionintheshortterm,itleadstotheperceptionoflanternsasnothavinganyvalue
andcandamagefutureeffortstobuildfinanciallyself‐sustainingdistributionnetworks.
Organizationsenteringnewmarketsforsolarlanternsmustassessimportduties
andtaxesassociatedwithsolarproducts,andshouldproactivelyengagewiththenational
governmenttoeducateofficialsonthepotentialhealthandfinancialbenefitsofsolar
lanternsforoff‐gridcommunities.Itisalsoimportanttoidentifyothercharitableefforts
thatmayhavespoiledmarketsthroughcharitabledistributionprograms.Inregionswhere
29
freedistributioneffortsweresustainedforlongperiodsoftime,itmaybeverydifficultto
convinceconsumersthatthebenefitsoflanternsareworthpayingfor.
Market Barrier #6. After‐Sales Services
After‐salesservicesandmaintenanceeffortsareoneofthelargestchallengesto
overcome,asstatedvariousstakeholders.Onthesupplyside,acombinationoflantern
pricepoints,lowlevelsofproductpenetrationandlimitedaccesstotheconsumersinrural
areashavelimitedmanufacturers’abilitytoprovidefavorableandcomprehensiveafter‐
salesservicesinacosteffectivemanner.Onthedemandside,consumersareoftenunaware
thattheyareentitledtowarrantyandservice,whichinhibitsdemandforsuchservices.
Thisleadstowritingoffafaultyproductasabadinvestmentwithoutseekingrepairor
maintenanceservices.Ithasalsobeenobservedthatwhenconsumersdoseek
maintenance,thecomplaintsarisefromimproperusageoftheproducts,ratherthan
technicalfaultswithintheproductsthemselves(IFC,2012b).
Intherecentyears,maintenancehasbecomeanintegralpartofthesolarlantern
ecosystem.Severalexistingbrands,primarilymarketleaderssuchasGreenLightPlanet
andSELCOIndia,havebegunprovidingafter‐salessupporttoconsumers,includingbasic
repairsandtechnicalsupport,establishmentofruralservicecenters,andreplacementof
lanternsasperformalwarrantyagreements(IFC,2012b).Repairsaregenerallycarriedout
bytechnically‐trainedpersonnel.Manufacturerstypicallyinvestinthedistribution
networktoprovidetrainingtolocalpeople,followingwhichdistributorsprovideafter‐
salesservicestocustomersonbehalfofthemanufacturers.Thisrequiressignificant
investmentinbothtrainingdistributors/technicians,aswellasmanagingservicecentersin
differentregions(IFC,2012b).SELCOmaintainsmultipleruraltechnicalcenterstocope
withmaintenanceissues(Mukherji,2011).GreenLightplanetmaintainsanetworkofrural
distributorsalsoknownassaathis,sothatifalanternstopsworkingitcanbereturnedto
thesesaathiswhowillthenpassitontothecentralizedmanufacturers(IFC,2012a).
BarefootPoweroffersrepairsbyestablishingserviceandrepairstationsincooperation
withmajordistributorsinitsareasofoperation.Anothermanufacturer,BettaLights,
providesregionaldistributorswithstockandtraining,andhasthemrepairorreplaceunits
asneeded.DistributorssendfaultreportsanddefectivecomponentsbacktoBettaLights
(IFC,2012b).Innovativeplayersarelikelytocapitalizeonmoderntechnologieslikemobile
phonestodevelopeffectiveinterfacesbetweencustomersandafter‐salesrepresentatives.
Case studies
Theprevioussectionpresentedthenumeroussignificantchallengestoestablishing
self‐sustaininglanterndistributionnetworksservingBOPcustomers.Thefollowingcase
studiesservetohighlightfourexamplesofinternationalorganizationsthathavebeen
highlysuccessfulatdevisingsolutionstoeachofthesechallenges.Thecasestudiesgavethe
MastersTeamanopportunitytobetterunderstandlanterndistributioninaction,and
30
likewise,theyareusefultoolsfororientingreadersofthisreportbeforetheymoveonto
thelanternprojectdesignpresentedinChapterII.
Case Study #1. Greenlight Planet
At55%oftheworld’stotal,Asiahasthelargestoff‐gridpopulation.Thistranslates
into22%ofthepopulationinAsia,or798millionpeoplewithoutaccesstoelectricity(IFC,
2012c).Indiafacesthemostacutechallengeofelectricityaccessintheworldwith75
millionofits226millionhouseholdsoffthegrid,thelargestsuchdemographicglobally
(IFC,2012c).IndiathereforerepresentsavastBOPmarketthatcouldpotentiallybe
suppliedwithsolartechnology.GreenlightPlanetisanexampleofanorganizationthathas
beenhighlysuccessfulattappingthisvastoff‐gridmarket.
GreenlightPlanetInc.wasfoundedbyPatrickWalsh,anundergraduatestudentat
theUniversityofIllinoisatUrbana‐Champaign.WalshgainedexperiencewithruralIndia
whileworkingforEngineersWithoutBorders.LaunchedinJune2009,GreenlightPlanet
manufacturesanddistributesphotovoltaiclightingdevicestargetedatpeoplewithout
accesstoelectricity.ItbeganitsoperationsinthenorthernpartofIndia,primarilyinthe
stateofBihar,andhassinceexpandedtoOrissaandUttarPradesh(Intellecap,2012).
Greenlight’smajorproductlineisSunKinglamps.Thecompanyofferstwotypesof
solarlanterns:SunKingSoloandSunKingPropricedatINR900(US$17)andINR1,600
(US$31),respectively.Cheapsolarlamps,oftenmadeinChina,areavailableinshopsin
ruralBiharbuttheyareunreliableandofpoorquality.Indiahasalargeruralpopulation
thatusescellularphones,andpeoplewanttobeabletochargetheirphones.Peoplespend
asignificantamountofmoneyandtimeonchargingtheirphones.Onestudyfoundthatin
ruralareasofeasternIndia,peoplespentalargerpartoftheirincomeonchargingtheir
phonesthatactualtalktime(Hartnell,2011).Ataone‐timepriceofUS$17or$31,theSun
Kinglanternislessexpensive,andconsiderablybrighterthanakerosenelamp.Italso
incorporatescellphonechargingcapabilities,andisofferedwithaone‐yearwarrantyfrom
Greenlight(Intellecap,2012).
Greenlight’scustomerbaseisprimarilyconstitutedoffarmers(58%)andsmall
businessowners(23%),withapproximatelyhalfofitscustomersearningbelowINR3,000
(US$57)permonth.Thankstoauniquedistributionnetwork,GreenlightPlanethasbeen
abletoachievesignificantmarketpenetrationinruralIndia.Distributionremainsoneof
themostsignificantmarketbarriersinthesolarlanternecosystem(IFC,2012b).The
distributionnetworkatthegrassrootslevelconsistsofvillage‐leveldirectsellers,called
SunKingsaathis(thewordmeans“friend”inHindi),eachofwhomisresponsiblefora
groupofvillagesthatcomprisesroughly2,000households.Saathisarevillage‐level
entrepreneurs–theycanbefarmers,teachers,orhousewives,andgenerallysellthe
lanternsasanadditionalsourceofincome.Theyworkforadditionalhourseachevening
aftertheirdayjobs.Theseadditionalhoursgenerallydoublehouseholdincome.Since
31
saathisarefromthelocalcommunity,theyareknownandrespectedbythevillagers.This
impliesthattheyhaveastrongconnectionwiththeirtargetcustomerbase,andtheycan
leveragethisconnectiontoachievehighmarketpenetrationlevels.Saathissitdownwith
families,showthemthelanternsandtheamountoflighttheygive,andhelpthemmanage
theircurrentexpendituresonlightandpaybackperiodforthelanterns.Apartfromthe
saathis,therearealsoteamleaders,districtsalesmanagersandregionalsalesmanagers
thatformthehigherlayersofthedistributionnetwork.Full‐timeteamleadersfind,train
andsupportthesaathis.Allsaathisreceivetrainingbeforetheysetouttosellthelanterns.
Fourhundredsaathisnowcover10percentofBihar.WhenalotofhomeshaveaSunKing
light,thesaathibecomessotrustedandcredibleinthatvillagethatheisinagoodposition
toselladditionalproductslikewaterfiltersorcleancookstovesalongsidethelanternsto
offeracompleteproductportfoliothatraisesthestandardoflivingoftheconsumers
(Hartnell,2011).
Consistentwithotherstudies,consumerawarenesswasfoundtobecriticaltothe
successofGreenlightlanterns.Markettestingwascarriedoutinafewverypoorvillagesin
avanwithsomeprototypelights.Initially,villagerswerenotverywelcoming,andthe
lanternswerehavingtroubleselling.However,whenanNGOfieldworkerwasincludedas
apartofthesalesteamandsenttohisownvillagetotrytohelptheGreenlightteam,a
largenumberoflanternsweresold.Thisexhibitedtheimportanceofhavinglocalswithin
thesalesanddistributionnetwork(Hartnell,2011).
GreenlightistargetingINR87.4crores(US$16.7million)inrevenuesin2013‐14–
anexponentialgrowthprojectioncomparedtotheINR8.3crores(US$1.5million)earned
in2011‐12.Itplanstoconsolidateexistingoperationsandestablishitspresenceacross
Indiawithitssustainabledeliverymodel.Italsoaimstoreleaseanupgradedproductevery
4‐6months,aswellasexpandtoadditionalproductlines.Greenlightplanstopursuea
strategyofhorizontalexpansionbyaddingotherproductssuchascleancookstovestoits
productportfolio(Intellecap,2012).
Case Study #2. SELCO India
SELCOIndiaisaBangalore‐basedsocialenterprisethatmakesphotovoltaicsolar
lightingaccessibletoBOPpopulationsinIndia.SELCO’smissionisbasedonasimplebut
powerfulideaofimprovingtheeconomicconditionsofthepoorbyincreasingtheir
productivity(Mukherji,2011).Over400millionpeopleinIndiastilllackelectricityand
dependonpolluting,unsafe,andexpensivekerosenelanternsforlighting.These
consumersspendmorethanINR100(US$1.9)everymonthonkeroseneforlanternsthat
providedim,unsteadylight,toxicsmokeandahighriskofcatastrophicfires(Intellecap,
2012).ThecorebusinessofSELCOisthedesignandsaleofPVsolar‐home‐systems,
principallytoprovidelighting,butalsofordevicessuchasradios,cassetteplayersandfans.
32
SELCOPhotovoltaicElectricPrivateLimitedwasfoundedbyDr.HarishHandeasa
commercialenterprisethatwouldsellsolarlightsinruralIndia.Itbeganasasubsidiaryof
SolarElectricLightFund(SELF)–thesponsorofthisMastersProject–andwasfundedby
aU.S.Rockefellergrantof$40,000.RuralpopulationsinIndiahaveaverageincomesofless
thanUS$50permonth,makingupfrontinvestmentinsolarlighting,whichrangesfromUS
$200to$500,prohibitivelyexpensive(Mukherji,2011).SELCOrecognizedthisgapinthe
market,andcameupwithaninnovativebusinessmodelthatwouldallowvillagersto
installsolarlightingintheirhomes.SELCOworkedextensivelywithlocalstate‐owned
financialinstitutionstoensurethateachvillager’srepaymentpatternwastailoredtohis
individualcashflows.Manypoorhouseholdswhocanaffordthemonthlyloanrepayments
stillfinditdifficulttopaytheupfrontdown‐payment.Asapilot,SELCOusedpartofthe
2005AshdenAwardprizemoneyasa“down‐paymentguarantee”,sothatbankswereable
toloantocustomerswhocouldnotaffordadown‐payment.Thismodelhasproventobe
verysuccessful(Ashden,2009).
SELCOearlyonrealizedtheimportanceofhavinglongtermrelationshipswith
suppliersfortheirbusiness.AllthecomponentsofthePVsystemsaremanufacturedin
India.PVmodulesandbatteriesareimported,butSELCOinitiallyhadproblemswiththe
qualityofCFLs,andsosetupasister‐businesstomanufacturebothCFLsandcharge
controllers(Ashden,2009).ThesolarpanelsaresourcedfromTataBPSolar,aleading
solarpanelmanufacturerinIndia.SELCOtriedtodiversifytheirsupplierbase,butthis
provedharmfulintermsofreliabilityandqualityoftheproduct(Moorthy,2013).
AtypicalsalescycleforSELCOstartswithgaininganunderstandingofhowmuch
moneyacustomercanpayinmonthlyloaninstallments.ASELCOtechniciandiscusseswith
thecustomerthevariouscoststhatheincursforprovidinglightinhishome,bothinterms
ofoutofpocketexpensesaswellasforegoneopportunities.SELCOtechniciansthen
completetheinstallationofthePVsystempertheneedsofthecustomer.SELCO
technicianscheckeverysolarinstallationtwiceayeartoensurethattheyareinproper
workingcondition.Sincethelivelihoodsofmanycustomersarecriticallydependentonthe
solarlightssuppliedbySELCO,thetechnicianstrytorespondtoeverybreakdownasfastas
possible.Mostoftheinstallationsareinremoteareas,andthismakesmaintenanceefforts
particularlychallenging.SELCOhassetupanumberofruralservicecentersaspartoftheir
sustainableruraldeliverymodeltoaugmenttheirmaintenanceefforts(Mukherji,2011).As
oftoday,SELCOisabletorespondtomorethanhalfofallmaintenancerelatedcallswithin
24hoursandtheyareconstantlyworkingonwaystoimprovethisnumber.PVmodules
suppliedbySELCOcomewitha10‐yearguaranteeandbatterieswitha3‐yearguarantee:
anyfaultsarereportedtotheSELCOheadoffice,whichkeepsdetailsofallsystems,sothat
faultysystemscanbetracedbacktotheappropriatesupplier(Ashden,2009).
Besidessolarhomelightingsystems,SELCOalsomanufacturessolarlampsthatcan
beusedbystreetvendorstoselltheirwaresatthemarket.Streetvendorshoweverusually
donotneedlampsfortheentiredayandthereforewouldnotbekeenoninvestingalarge
33
partoftheirmonthlyincomeonlanterns.SELCOcameupwithaninnovativewayto
circumventthisproblem.SELCOidentifiedentrepreneurswhowerewillingtobuythe
lanternsfromSELCO.Theseentrepreneursthenrentthelanternstovendorsforaspecific
duration.Thissolarlanternrentalsystemprovedtobeeconomicalforvendors.The
importanceoftheentrepreneursisunderscoredhereaswell–withoutthem,itwouldbe
nearlyimpossibleforthevendorstoaffordsuchlanterns(Mukherji,2011).
SELCOwontwoAshdenAwards,thefirstin2005,andthesecondin2007–an
“OutstandingAchievementAward”foritsworkinlightingtheBOP.Itwasaroundthis
periodthattheydecidedtojoinhandswithSEWAbankinGujarat,whichhas300,000
femalecustomers.Inthenexttwoyears,SELCOdesignedseveralsolarproductsin
consultationwithSEWA.Thisincludedsolarlanternsforthevegetableandfruitvendors
whocoulduseitforextendingtheirworkinghoursaswellasusingitathome,headlamps
formidwivesandflowerpickers,solarcapsforlaborersandmasons,andasmokelessstove
forcooking.SELCO’spartnershipwithSEWAallowedthemventureawayfromtheir
primaryproductlinetoexplorenewlines,makingthemanall‐roundenergyproduct
company(Ashden,2009).
Morethan15yearsafteritwasfounded,SELCOhasachieveditsmissionofbeinga
sustainableenergyprovidertoimpoverishedpopulations,increasingtheirproductivityand
improvingtheirqualityoflife.Inthefuture,thefirmisfocusingitsstrategyonreplication
ofitsprovenmodelratherthanexpansion,althoughitisexploringanexpansionintomini‐
grids.Themanagementfeelsthatasmallbusinessmodelisideallysuitableforthekindof
workthatSELCOdoes.Scalingupwillimplystandardization,whichisagainstSELCO’s
fundamentalbusinesstenetwheresolutionsarecustomizedkeepinginmindthecontext
andneedsoftheendcustomer(Moorthy,2013).
Case Study #3. Sunny Money
Theelectrificationprobleminsub‐SaharanAfricaisparticularlygrave,with600
millionpeoplelackingelectricity(91%oftheruralpopulation).Asaresultofthelackof
electricity,290millionpeopleinAfricarelyonkerosenetoprovidelightforwork,
socializing,andstudyingintheevenings.AccordingtoSolarAid’sresearch,burningasingle
kerosenelightinthehomeperdayhasahealthimpactequivalenttosmoking40cigarettes
forthosewhoaresubjectedtothefumes(SolarAid,2013a).Thiscontributestothe400,000
annualdeathsattributedtoindoorairpollutioninsub‐SaharanAfrica.Kerosenealso
presentsafinancialchallengeforBOPfamilies,accountingforanaverageof10‐15%of
annualhouseholdexpenditures,whichintheUnitedStatesisequivalenttoUS$5,000to
US$8,000forlightingservicesalone(SolarAid,2013a).
SunnyMoneywasfoundedasacommercialarmoftheU.K.non‐profitSolarAidin
2010toaddressthelackofelectrificationinAfrica.SolarAidbelievedintheimportanceof
philanthropyinopeningupmarketstonewtechnologiesandideas,butrecognizedthata
commercialapproachcouldallowsolarlanterndistributioneffortstoscalemorequickly
34
(Ashden,2013).Thefor‐profitapproachembracedbySolarAidthroughSunnyMoney
openedthedoortonewsourcesoffundingfromenthusiasticdonorswhoweresupportive
ofaninnovativenewapproachtosolvingtheelectrificationchallenge.Newcontributions
camefrommajorcompanies,includingBarclaysBankandtheManGroup,aswellas
individualdonors(SolarAid,2013b).SolarAidlaunchedSunnyMoneyspecificallytohelp
thenon‐profitachieveitsgoalofcompletelyeradicatingkerosenelampsfromAfricaby
2020.Fouryearsafteritslaunch,SunnyMoneybelievesthatitisontracktomakingthis
ambitiousgoalareality.
SunnyMoneystandsoutasapioneerofsolarlanterndistribution.Bytheendof
2013,thecompanyhadsoldalmost800,000lightsinTanzania(57%ofsales),Kenya
(27%),Malawi,andZambia(16%ofsalesbetweenbothcountries).Bytheendof2012,the
exponentialrateofsalesachievedbySunnyMoneyputthecompanyinthenumberone
positionfortotallanternsdistributedinAfrica,edgingouttheprevioustitle‐holder,French
oilcompanyTotal(Andrews,2012).Theextentofthecompany’ssuccessisshownbelowin
Figure8.
Figure 8. Sunny Money lantern sales (SolarAid, 2013a) SunnyMoneyowesitssuccessinparttothepowerofits“StudentLights”campaign.
Inlate2010,shortlyafteritslaunch,SunnyMoneylaunchedacampaignfocusedonschools
assaleshubs,teachersasmarketingassociates,andstudentsastargetcustomers.With
approvalfromlocaleducationalauthorities,thecompanyorganizedmeetingsatcentrally
locatedschools,invitingheadteachersfromthesurroundingregiontoattend.Inthese
initialmeetingsteacherswereeducatedonthehealth,financial,andotherbenefitsofsolar
lanternsandencouragedtomakesalespitchestotheirstudents.Withintwoweeks,Sunny
Moneycontactedteacherstocollectorders,whichwereshippedviapublictransportation
toparticipatingschools.Teacherswereawardedfreelanternsforordersof40lanternsor
more(Ashden,2013).Thisapproachwassosuccessfulthatfollowinganexpansionto
Tanzania’sArushaandKilimanjaroregionsin2012,theSunnyMoneyoperationsdirector
statedthat:“Demandhasfarexceededourabilitytosupply,andseveraltimeswehavehad
tostopcampaigningtowaitformorelightstobeimported.Evensosaleshavebeen
35
runningat150%ofbudgetresultinginover50,000solarstudylightsbenefitingstudentsin
thesetworegionsalone”(LightingAfrica,2012).
SunnyMoneyiscarefultoonlyofferproductsthathavepassedLightingAfrica
qualitycertificationtesting.Theirselectiveportfolioincludesproductsfromd.Light,
GreenlightPlanet,andBarefootPower,rangingfromUS$7to$40retailpricedependingon
themodel.Mostlanternsareequippedwithcellphonechargingcapabilities.Toensure
customersatisfactionandavoidmarketspoilage,everyproductcomeswitheitheraoneor
two‐yearmanufacturerwarranty,andacallcenterfieldscallsfromcustomerswhohave
experiencedproblemswiththeirproducts.Overall,followingarandomphonesurveyof
pastcustomers,SunnyMoneyrecordeda93%satisfactionratewith74%ofcustomers
reportedas“verysatisfied”(Ashden,2013).
Thecompany’sgoalfor2014istosellover1,000,000lanternsinoneyear(SolarAid,
2013a).Currentlyallsalesarecashinadvance,butmanagingdirectorJohnKeaneis
pursuingavarietyofoptionsforofferingpay‐as‐you‐gofinancingplans.AsSunnyMoney
expandsaroundAfrica,newdistributionmodelsarealsounderdevelopment,including
usinganetworkoffranchiseestosellproductsthroughlocalentrepreneurs(IFC,2012a).
Case Study #4: d.Light
d.LightDesignisaprominentsolarlanternmanufacturer,foundedin2007by
StanfordGraduateSchoolofBusinessstudentsSamGoldmanandTedNozun.Becauseofits
emergencefromaleadingbusinessschool,d.LighthaspursuedaSiliconValleystartup
modelofattractingtoptiertalentandventurecapital.Thecompany’sinexpensiveand
durablelanternshavehelpedopenpreviouslyinaccessiblemarketstosolarlanternsby
makingthemaffordableandsuitableforBOPcustomersinremoteregionsofthe
developingworld.
WhileonaPeaceCorpsmissioninBenin,Africa,Goldmanwitnessedthesevere
burningofaneighbor’schildwhenakerosenelanternoverturnedintheirhome.This
experiencepromptedGoldmantoenrollinan“EntrepreneurialDesignforExtreme
Affordability”courseatStanford,whereheandco‐founderNozuncameupwiththedesign
ford.Light’sfirstsolarlanternproduct.In2008,thepairmanagedtosecure$6millionin
SeriesAventurecapitalfundingfromconventionalandimpactinvestorsincludingAcumen
Fund,NexusVenturePartners,GrayMattersCapital,DraperFisherJurvetsonandGarage
TechnologyVentures.Asaresultofthecompany’searlysuccessinbuildingacompanythat
spannedmanufacturinginChina,designinSanFranciscoandHongKong,andofficesin
IndiaandKenya,afurther$5.5millionroundofcapitalwasraisedin2010(d.light,2010).
Onlyfiveyearsintoitsoperations,d.Lightnowhasamanagementteamthatincludesa
legionoftopexecutives,includingCEODonnTice,U‐MRossSchoolofBusinessgraduate
with30yearsofexperienceinglobalmanagementroles;CFOAlWoodwhohasledthe
36
successfulIPOsofmultipletechcompanies;andVPswithdecadesofexperienceinproduct
distribution,microfinance,andmanagementofFortune500companies(d.light,2013).
Buildingonitssturdyfinancial
backingandexperiencedleadership,d.Light
hasmanagedtoexpanditsoperationsto
overfortycountriesandsellover12,000,000
lanterns(Figure9).Thecompanynowhas
10,000retailoutlets,tenfieldoffices,four
regionalhubs,anddozensofpartnerships
withmajorcompaniestodistributeits
products.ApartnershipwithTotal,the
Frenchoilcompany,thatbeganin2013
allowedd.Lighttoexpanditsoperations
exponentially.Totalagreedtodistributeover
Figure 9. D.Light’s Phenomenal Growth 500,000lanternspermonthinAfricaaspart
Rate (d.light, 2013)
ofits“AccesstoEnergyProgram”(Zweynert,
2013).ThepartnershipwithTotalandothermajorcustomershasconvincedd.Lightthatit
shoulddreambig:theCEOhasannouncedagoalofproviding50millionpeoplewithclean
energyfromtheirproductsby2015and100millionby2020.
Thecoreinnovationsthathavemaded.Light’sproductssuccessfulfromthe
beginningaretheirlowpricepoint,durabledesign,manufacturerwarranty,andconstant
innovationusingcuttingedgetechnology.Forexample,d.Light’slatestproductsretailfor
between$8and$40dependingonthemodel;canberainedon,coveredwithdirt,stepped
on,orevenrunoverbyacar;comewithatwo‐yearwarranty;andemploystate‐of‐the‐art
lithium‐ionbatteriesthatlastfor10yearsandLEDsthatare20%moreefficientthanthose
usedinearlierproducts(d.Light,2013).Asanexampleofhowimportantdurabilityisfor
productuptakeattheBOP,oned.Lightentrepreneurexplainedarecentexperiencewitha
lantern:
AgroupofstudentstravelingbackfromGulutoKitgum[Kenya](…)hadaflattyre
[sic]ontheroad.Itwasafter7p.m.andoneofthemhadthed.LightS1reader
whichheplacedontopofthecartogivethemlightastheychangedtyres.(…)
Theyforgotthelightontopofthecarand[it]toppleddownandwasrunover.(…)
Thestandwascompletelyflattened;thelighthaddustparticlespressedintoit,but
(…)itdidn´tbreakanditwasstilllighting(…).Needlesstosayallotheroccupants
ofthecarorderedfortheirownimmediately.Theyarespreadingthenews
(d.light,2012).
Inadditiontorelyingonadurableandinexpensivedesign,d.Lightemploysa
thoughtfulandvariedapproachtoproductdistribution.Partnershipsliketheonewith
Totalcompriseandimportantsourceoforders,butd.Lightalsodistributesproducts
throughproprietaryoutlets,retailchains,andfranchisesthatemploymicro‐entrepreneurs
37
(IFC,2012b).Thecompanylearnedearlyonthatsellinglanternsthroughretailersthat
offeredwidearraysofotherlightingproductswasnotnecessarilybeneficial:theydidnot
havethetimetoeducateconsumersabouttheuniquebenefitsofthenewdesign.Movingto
moreselectiveretailers,proprietaryoutlets,andcompany‐trainedentrepreneurnetworks
allowedthecompanytotakeoffinAfrica,India,andSoutheastAsia(Shah,2013).
Solar Lantern Projects in Haiti AnumberoforganizationsandprogramsarealreadyworkingtoaddresstheHaitian
energyaccessproblembysellingordistributingsolarlanterns.Throughresearchingthe
natureandoutcomesofthesesolarlanternprograms,theMastersTeamhopedtoidentify
potentialpartnersfortheSELFlanternprojectandtogainfamiliaritywiththeexisting
lanterndistributionlandscape.Thefollowingprofilesbrieflydiscussongoingeffortsin
Haiti.ThepastdistributioneffortsofMicamaSoley,theorganizationwithwhichthe
MastersTeamultimatelydevelopedthedistributionproject,arenotfeaturedinthissection
astheyarediscussedatlengthinChapterII.
Project #1. Global Sustainable Electricity Partnership GlobalSustainableElectricityPartnershipisanon‐profitorganizationthatpromotes
sustainableenergydevelopmentthroughelectricitysectorprojectsandhumancapacity
buildingactivitiesindevelopingandemergingnationsworldwide(GSEP,2013a).Sinceits
inceptionin1992,ithasworkedincollaborationwithUnitedNationagencies,key
internationalorganizationsandnumerouslocalpartnerstoenhancecleanenergyaccess
andreductionoffossilfuelsconsumptionbythepoorestpopulationsoftheworldwithout
pursuingcommercialgain.DuringtheUnitedNationsRio+20conferencein2012,Global
SustainableElectricityPartnershippartneredwiththeGlobalBrightLightFoundationto
provide50,000portablesolarlanternstooff‐gridhouseholdsindevelopingworld,
includingHaiti,thathavenoelectricityaccess.Outofthe50,000lamps,10,000willbe
distributedinruralHaititooff‐gridfamiliesthroughaclosepartnershipwithEarthSpark
anditslocalsubsidiaryEnèjiPwòp(Haitiancreolefor“cleanenergy”)(GSEP,2013b).
ThelanternmodelchosenbyGlobalBrightLightFoundationandGlobalSustainable
ElectricityPartnershipwastheGreenlightPlanetSunKingProsolar‐poweredlantern
(Figure10)duetothemodel’sreliabilityandconvenience(GlobalBrightLightFoundation,
2013).SunKingProisabletochargecellphonesthesimultaneouslywhenproviding
illuminationfortheusers.Threedifferentlightmodesallowuserstoadjustbrightness
accordinglyfromtwentylumenstotenlumens(GreenlightPlanet,2014).Thephotovoltaic
chargingpanelofSunKingProisaboutthesizeofatabletandstoreselectricityina
lithium‐ionbatterypackthatcanbefullychargedinaboutfourtosixhoursofdaylight.
Thissolarlanternmodelcanprovidestablelightingwithitslightemittingdiode(LED)
illuminationthatisatleasttwiceasbrightasatypicalkerosene‐fueledlantern.Thelantern
canprovideuptosixteenhoursoflightwithafullcharge,dependingonuse(Global
38
BrightLightFoundation,2013).Withawater‐
sealedcover,SunKingProcanbeusedsafely
indoorandoutdoorundervariousweather
conditions.Theexpectedlifetimeforthissolar
lanternmodelisrelativelylong,withabattery
lifeoffiveyears,LEDlifeoftenyears,andatwo
yearwarrantyforthecompleteproduct
(GreenlightPlanet,2014).
Insteadofdistributingthelanternsto
ruralfamiliesforfree,lanternsweresoldfora
reasonablepricetoensurethatpeoplewould
takeownershipandresponsibilityforthe
lanterns,andusethemwithcare.Global
SustainableElectricityPartnershipandGlobal
Figure 10. Greenlight Planet Sun King BrightLightFoundationhavebeenworking
Lantern Model
closelywithlocalpartnerseversincethelaunch
oftheproject.Theygettothefieldtoselect
locationssuitablefortheproject,connectwithlocalpartnersinordertoprovidebetter
servicestousersregardingsustainabilityaspectssuchasrepairandreplacement.
Locationsselectedforthisprojectareareaswithveryslimprobabilityofinstalling
distributionwiresorevenamicro‐grid.Lanternsaredistributedbysellingthroughthe
HaitianbrandEnèjiPwòp.LocalentrepreneurssupportedbyGlobalSustainableElectricity
PartnershipandGlobalBrightLightFoundationareinvolvedinthelanterndistribution
process.Throughdistributingaffordablesolarlanterns,localentrepreneursareableto
earnmoreincomefortheirfamilythanwaspreviouslypossible.Familiesthatpurchase
lanternfromtheselocalentrepreneursarealsobenefiteconomicallyandsocially.Before
owningsolarlanterns,mostfamiliesneedtocollectwoodorpurchasekerosenetoburnfor
light.Solarlanternsareabletoprovidethesefamilieswithreliablelightwheneverthey
needit.Also,childrenwillhaveahealthierindoorenvironmentforlivingwithoutallthe
toxicemissionsfromwoodandkeroseneburning(GSEP,2013c).
Project #2. WakaWaka WakaWaka(“ShineBright”inSwahili)develops,manufactures,andmarketshigh‐
tech,low‐costsolarpoweredlampsandchargesinbothdevelopingdevelopedworld.The
patentedsolartechnologydevelopedbyWakaWakaanditspartnerIntivationhave
resultedinthedevelopmentoftwodifferentmodels:WakaWakaLightandWakaWaka
Power(WakaWaka,2014).ThisNetherlands‐basedsolarcompanyaimstodeliver50,000
renewableenergylampstolightupthelivesofmorethan250,000peoplecurrently
withoutaccesstoelectricityaroundtheglobe(TheGrio,2013).InHaitialone,around
12,000lampshavebeendistributedtodate(WakaWaka,2013a).Theprojectwasinitially
39
pilotedatapartnerschoolinKenyaandHaitiwasthesecondlocationchosenforthepilot
distributionprogram(Gestel,2013).
ThemodeldistributedinthisprojectistheWakaWakaLightsolarlantern(Figure
11).TheWakaWakaLightmodelhasaverylightbodyweightofapproximately200grams.
Witha0.5W,120lumen/wattLEDlight,themodelisabletoprovide8hoursoflightatthe
brightestsettingafterafullcharge(WakaWaka,2013b).Eachlampisequippedwiththree
differentlightintensitymodesandisfullyrechargedwhenplacedbeneaththesunforafew
hours(WakaWaka,2013b).WakaWakaLightissupportedby800mAhNiMhAAA‐size
batteries,whichcanlastforatleastthreeyears,thesolarcellinstalledis0.75W
monocrystallinethatcanlastfortenyears.Themodelalsoincludeextrafunctions,suchas
anSOSemergencysignal,autoenergysavingsetting,and200%torchmodewhichswitches
backto100%brightnessafter30seconds.WakaWakaprovidesaoneyearwarrantyforthe
model,andwithawater‐resistantcover,WakaWakaLightisdesignedtoprovidesafesolar
powerthroughtheentirenight.
Figure 11. WakaWaka Light model in different configurations
WakaWakaemploysabuy‐one‐donate‐onemodelthathasbeensuccessfully
implementedbyotherbrandssuchastheshoecompanyTOMS(Park&Marquis,2014).
WakaWakasellsitssolarlanternmodelsindevelopedeconomiesatacompetitiveprice,the
purchaseofeachlanternwillsubsidizeanotherlanterntobegiventotheUNRefugee
Agency(UNHCR)andotherorganizationsfordistributiontoareasintheworldwithout
electricityaccess(TheGrio,2013).WakaWakabelievesthatthecombinationofbusiness
andaidisthebestwaytogeneratepositiveimpact.PartoftherevenueWakaWakagains
fromsellinglanternsinwealthiercountriesisusedtomaketheirproductsavailabletooff‐
gridcommunitiesaroundtheworldatanaffordableprice(WakaWaka,2014).Asthe
company’sbusinessmodelmatures,WakaWakaistryingtoexpandthebuy‐one‐donate‐
onecampaigntoabuy‐one‐donate‐twomodelinthefuture.Therationalebehindtheuseof
partnerorganizationsisthatlanternscanbedistributedtothepeopleinwiththegreatest
levelofneed.Inthefuture,theWakaWakacompanyplanstobuildanassemblyplantin
40
HaititomanufacturetheselightssothatitcansupplytheAmericanmarket,withan
estimated100jobscreatedoncetheplantisatfullproductioncapacity(TheGrio,2013).
WakaWakaisdoingbeyondjustsimplyprovideaidtothepoor.Thebuyone,getone
freecampaignprovidespeopleinthedevelopedworldaneasyandeffectiveopportunityto
helppeoplestrugglingwithoutelectricity.Thisbusinessmodelcreatesabridgebetween
richandpoor,andrelievessomefinancialburdenfromWakaWakabylettingwealthier
buyerssubsidizethepoor.Furthermore,thisarrangementhelpsmakeconsumersin
wealthycountriesawareofextremepoverty.Ifsuccessful,theplanofopeninga
manufacturingplantinHaiticouldbeawin‐winforbothWakaWakaandHaitian
communities.Havinganin‐countrymanufacturingplantwillsaveWakaWakafuture
transportationcostforlanternstogettoHaiti.Alongwiththeconstructionofplantlocal
peoplewillgetmorefamiliarwiththeirsolarlanternproducts,learnmoreaboutthe
benefits,andinturnwillbemorewillinglytoowntheproductinthefuture.Forthe
community,havingamanufacturingplantthatprovidesjobopportunitieswillallowlocals
toearnastableincomeinanewway.Trainingsareexpectedtoprovidewithnewjobs,
givinglocalemployeesachancetobuildupnewskillsandgainexperiencewithadvanced
solartechnology.
Project #3. Let’s Share the Sun & Phocos North America Let’sSharetheSunFoundation(LSTS)wasformedin1985bytwoUniversityof
NotreDamegraduatesNancyBrennan‐JordanandWilliamJordan.LSTSaimstofacilitate
theuseofsolarenergyinpoorcommunitiesaroundtheworldsincethetechnological
innovationmadesolarpanelsmoreefficient,smaller,andlessexpensiveconsequently
improvingthelivesofthepoorandunderserved(LSTS,2011).TheFoundationhelpsinstall
solarpowerinpoorregionsoftheworldthatarerichinsolarresourcesbutlackingin
electricityinfrastructure.
Followingthe2010earthquakeinHaiti,
LSTSsetouttoprovideHaitianschoolswithan
affordable,high‐quality,durablelighting
solution.Aftermeetingwithrepresentatives
fromPhocosNorthAmericain2012and
learningmoreabouttheirproducts,LSTS
foundtheidealsolution:thePhocosPicoLamp
(Figure12).ThePicoLampisalightingdevice
speciallydesignedtomeettheneedsofrural
households.Themodelhasthreelightinglevel
settingsallowinguserstoadjustlightness
Figure 12. Phocos Pico Lamp
accordingly,anditisalsoequippedwitha
functionthatautomaticallyreducesbrightnesswhenbatteriesarelowtoconserveenergy
41
(Phocos,2014).Withfour2,100mAhAA‐sizeNiMHbatteriesthatcanenduremorethan
500chargingcycles,thePicoLampisabletoprovidelightforupto55hoursafterafull
charge.Witha7Vto25Vsolarmodule,thelampcanbefullychargedinthreetofivehours
dependingonthesolarradiationreceived.Thismodelalsoprovideuserswithanoptionto
chargetheircellphoneswithsolarenergy,normallyacellphonecanbefullychargedin
approximatelytwohours.
In2012,LSTSbeganbydonating35PicoLampstofamiliesofstudentsoftheGeorge
WashingtonCarverAcademyinLeogane,Haiti.Afterthisdonation,LSTSexpectedtostarta
largecampaigndistributingsolarlanternswithphonechargingcapabilitiestoschoolsin
thepoorestregionsofHaiti.AccordingtoBrennan‐Jordan,LSTSco‐founder,thepurposeof
distributingtheselanternswasnotonlyprovidinglightforindividualfamilies,butalso
encouragingstudentstosayinschool.Inadditiontohavingaccesstoacleansourceof
lighting,lanternownerscanalsogeneraterevenuebyofferingphonechargingservicesfor
asmallfee(PhocosNews,2013).
Phocos,headquarteredinGermany,isoneoftheworld’sleadingmanufacturersof
solarchargecontrollersandcomponentsforautonomouspowersupply.Phocosisactive
worldwideandprovidesawiderangeofproductsindevelopingcountriesincludingcharge
controllersforsolarstreetlightsandruralhomesupportinIndia,Bangladesh,andNepal.
TheyalsosupplythePicolanternsystemsthatLSTSisdistributinginHaiti.ThePicoLamp
isequippedwithahigh‐efficiencypowerLEDandaUSBcharger(forcellphones,MP3
players,andothers).In2013,PhocosandLSTSsupplied138PicoSystemsforlighting
schoolsinmountainousareasofHaiti(Phocos,2013).LSTSdependsoncampaignfunding
tosupportallthelanterns,andthusthegrowthofsolarlanterndistributionislimitedand
dependsonthecampaignoutcome.LSTSisactivelydevelopingcampaignplanstoraise
morefundingfortheproject,andisexpectingtoexpanditsoperationstoservemore
Haitiansinthenearfuture.
Haiti: Looking to the future Asacountrywithmorethanhalfofitspopulationlackingreliableelectricityaccess,
Haitineedsasmuchassistanceasitcangettomeetitsbasicresourceneeds.Duetoits
relativelysmallpopulationandisolationfromlargerat‐riskpopulationsinAfricaandAsia,
HaitihasreceivedinsufficientattentionfromlargeNGOsthatareworkingtoaddress
energyaccessissues.SolarlanterndistributionprojectsinHaitithusfarhavebeenlimited
inscalecomparedtoprojectselsewhereintheworld.Luckily,non‐profitslikeGlobal
SustainableElectricityPartnership,WakaWaka,andLet’sSharetheSunFoundationare
helpingtodrawtheworld’sattentiontoHaiti.Sofar,Haitihasreceivedsomeattention,but
notenough.LargerprojectsarestillnecessarytohelpHaitiseriouslyaddressitslackof
accesstoelectricityandtheservicesthatitprovides.
42
ThesolarlanternprojectinitiatedbySELFinpartnershipwiththisMastersProject
willbeonepositivesteptowardaddressingHaiti’senergyneeds.Besidesprovidingtheoff‐
gridcommunitywithaffordablelanterns,SELF’sprojectalsocomeswithfinancialaidplan
andasustainablebusinessmodel.Lookingtothefuture,SELF’ssolarlanternprojectis
expectedtoserveparticularlyimpoverishedruralareasincentralHaitiandachieveaself‐
sustainingdistributionnetworkthatshouldallowittoremainindependentof
philanthropicdonationsfromoutsidethecountry.
43
CHAPTER II. The Solar Lantern Project in Haiti – Strategy in Action Introduction ChapterIofthisdocumentpresentedtheresultsoftheexhaustiveresearch–
primaryandsecondary–thatwereperformedoverthecourseoftheMastersProject.It
soughttoorientboththeteamandtheprojectadvisorstothechallengesposedbyalackof
electricityattheBOPandthearrayoftechnologicalsolutionsavailableforaddressingthose
issues.Itpresentedself‐sustainingbusinessmodelsasaneffectiveapproachtolantern
distribution,outlinedthemajorchallengesoftenencounteredwhentryingtoserveBOP
markets,andpresentedfourcasestudiesofinternationallyrenownedlanterndistributors
andthreestudiesoflocaloperationsinHaiti.Asaresultofourextensiveresearch,the
Teamisnowextremelywellversedinthenuancesofthesolarlanternindustry,aswellas
thechallengesfacedbypractitionersonthegroundinHaiti.
Againstthisresearchbackdrop,theMastersTeamhasbeenworkingsteadilysince
late2013tofindasuitablesolutiontoourprojectclient’sdilemma:howtobuilda
sustainabledistributionnetworkforsolarlanternsinHaitithatconformstotheguidelines
establishedbytheIDB–theagencyfundingtheproject.Overthepastfewmonths,wehave
workedwithSELFandanimportantpartner,MicamaSoley,todraftadistributionplanthat
promisestohelpSELFtomeetitsgrantobligationstoIDB,satisfyMicama’sfinancial
imperatives,facilitatetheimmediatedistributionofroughly5,000solarlanternsinrural
Haiti,andlaythefoundationforaprogramthatcanbesustainedindefinitely.Thisisatall
challenge,butthankstotheconcertedeffortsofallinvolvedpartners,theMastersTeam
believesthatthechancesforsuccessarehigh.
ChapterIIprovidesadetailedanalysisoftheprojectthathasemergedfromplanning
sessionswithallinvolvedpartners.Ourassessmentofthebenefitsanddrawbacksofthe
programwillbeleftforChapterIII,whileChapterIVwilladdresstherisksand
recommendationsthatshouldallowforsuccessfulprojectdevelopment.Thegoalofthis
documentisnotonlytosatisfyanimportantrequirementofourMastersProject,butto
outlinetothebestofourabilitiesthestepsthatSELFandtheirpartnersinHaitimusttake
tomovetheprojectfromconcepttoreality.Theactualdevelopmentofthisprojectwill
dependonthecontinuedeffortsofSELFandtheirpartnerstoputthisplanintoactionand
overcomethemanychallengesthatwillinevitablyarisefromtheintrinsicdifficultiesofthe
projectorfrommisalignedinterestsbetweenthenumerousprojectpartners.
ThestructureofChapterIIisasfollows:wefirstprovideanoverviewofthelantern
distributionproject(“project”),followedbysectionsthattakedeepdivesintoimportant
topics,includingthespecificproductsthatwerechosenfortheproject,thefinancing
mechanismsthatenablethebusinessmodel,thetrainingprogramforentrepreneurs,the
distributionnetwork,andhowthechallengesofconsumerawarenessandmaintenance
willbeaddressed.
44
SECTION 1. Project Design Overview of the Project Design PriortobeginningtheircollaborationwiththisMastersTeam,SELFreceivedagrant
fromtheIDBwithroughly$150,000earmarkedforalanterndistributionprojectinHaiti.A
portionofthegrantwasdedicatedtoadministrationandtraining,whiletheremainderwas
reservedforthepurchaseoflanterns.Bythetimeimporttariffshavebeenpaidtothe
Haitiangovernment,roughly5,000lanternswillbeavailableforpurchaseanddistribution.
AnimportantgoalfortheMastersTeamwasnotsimplytobuildanetworkthatwould
allowSELFtodistributetherelativelysmallnumberoflanternsandmoveon,buttobuilda
modelthatcouldbesustainedindefinitelyintothefuture.Toaccomplishsuchaloftygoal,it
wasnecessaryforustopursueanexplicitlyfor‐profitmodelthatcouldbefinanciallyself‐
sufficientandexploreprivateenterprisesaspotentialon‐the‐groundpartners.
AlthoughSELFhasextensiveexperienceworkingonrenewable‐powered
electrificationprojectsinruralHaiti,theorganization’sprimaryareaofexpertiseisnot
lanterndistribution.Consequently,SELF’smanagementwasveryreceptivetothe
possibilityoftheMastersTeamspearheadingthedistributionplanforthesolarlantern
portionoftheIDBgrant.WiththeobjectiveofpresentingSELFwiththebestdistribution
planpossiblefortheproject,theteamhasspentthepastyearengagingwithpractitioners
inHaitiandabroad.TheresultoftheseeffortshasbeentheMastersTeam‐driven
formationofapartnershipbetweenSELFandMicamaSoley,aHaitiancompanyestablished
withtheexplicitly“social”goalofhelpingHaitiansimprovetheirlivesthroughappropriate
technology(Micama,2014).ThebackboneoftheprojectistheSELF‐Micamapartnership,
butitwillalsoinvolveamajorHaitianmicrofinanceinstitution,aninternational
sustainableenergydeveloper,andanindustry‐leadingsolarlanternmanufacturer.Eachof
thosepartnersandtheirroleswillbeexploredindetailinthisdocumentwithaflow
diagramrepresentedinFigure13.
Despiteonlyhavingbeeninexistencesince2009,throughitsowndirectretail
networkandstrategicpartnerships,MicamaSoleyhassurpassedthe100,000unitmarkin
HaitiforsolarlanternsdistributedtotheHaitianBOP.Partofthereasonforthisrapid
successisduetoMicamaSoley’soriginsasanoffshootofSAFICO,amajormattress
manufactureranddistributorinHaitiforthepast60years.TomAdamsonisatransplanted
CanadianwhooverseestheoperationsofbothSAFICOandMicamaSoleyasPresidentand
CEO.UnderAdamson’sleadership,MicamaSoleyhasbuiltastrongnetworkofpartnerships
withmicrofinanceinstitutions,internationalaidorganizations,solarlantern
manufacturers,andprovidersofvillage‐levelentrepreneurtraining.
Micama’sexpertiseinrurallanterndistributionisunparalleledinHaiti,asthe
100,000distributedlanternsdemonstrate.Othereffortshavehadlimitedsuccess,butas
wasoutlinedinthecasestudysectioninChapterI,nonehaveattainedasimilarscaleof
45
distribution.NotallofMicama’s
Grant Funds
lanternshavebeendistributed
directlybythecompany.Infact,
forthevastmajorityofitslantern
Grant
Funds
sales,Micamahasleverageexisting
networks,includingthatof
SAFICO,toreach“last‐mile”
customersasefficientlyas
possible.Micama’sexisting
networkinHaiti,itsexpertisein
Loans
lanterndistribution,anditshistory
Sale
ofsuccessfulpartnershiphaveled
Micro‐entrepreneurs
theMastersTeamtothe
conclusionthattheyareanideal
Resale
partnerforSELFinimplementing
thesolarlanternproject.The
End users
MastersTeamwasintroducedto
Figure 13. Project Design Flow Diagram
TomAdamsonthroughamutual
connectioninthesolarlanternindustry,andsincethatpointalleffortshavebeen
dedicatedtofacilitatingapartnershipbetweenMicamaandSELF,aswellasdesigningthe
specificsoftheproject’sstructure.
Underthecurrentprojectdesign,ratherthandirectlypurchasinglanternswith
grantfunding,SELFwillpartnerwithFonkoze,aprominentHaitianmicrofinance
institution,toestablishrevolvingloanfundsformicro‐entrepreneurs.PertheSELF‐Micama
agreement,Micamawillpurchaseaquantityoflanternsexactlyequivalenttothosethat
SELFwouldhavepurchasedundertheoriginalprovisionsofthegrant.Therevolvinggrant
programsattheMFIwillmakefundsavailabletoanetworkofmicro‐entrepreneurswho
willusethededicatedloanprogramtopurchaselanternsfromMicama.Althoughlantern
distributionwillultimatelydependonthenetworkofentrepreneurs,theywillreceive
extensivesalestrainingfromMicamabasedonitsalreadyprovenmodel,andcoaching
fromtheMFIstohelpthemmanagetheirfinances.Thepartnershiphopestobring200‐300
newentrepreneursintotheexistingMicamanetwork,greatlyexpandingitscurrentsales
capacity.Adamsonestimatesthatsuchanetworkcouldsuccessfullydistributeall5,000
lanternsinlessthantwelvemonths.
Theremainderofthischapterexaminesthemostcrucialaspectsoftheprojectin
detail:thedistributionplan,programfinancing,marketingandconsumerawareness,
productselection,andproductmaintenance.
46
Distribution Plan Secondaryresearchforthisprojectshowsthatdistributionchallengescanposea
majorimpedimenttoestablishingasuccessfulsolarlanterndistributionbusiness.Inmost
cases,solarlanternusersintheBOParelocatedinremoteruralareasthatareaccessible
onlybydirtroadsorsometimesdisconnectedentirelyfromnationalroadsystems.
Similarly,thereareveryseldomreliablethirdpartylogisticscompanies(3PLs)with
regulardistributionrouteswhoseservicescanbepurchasedtohelpmovegoodstoremote
areas.Mostlanterndistributorsarerequiredtobuildtheirownnetworksfromtheground
up,makingallcapitalinvestmentsandprovidingallpersonneltrainingthemselves.Access
challengesincreasecosts,asdoesthelackofestablishedpartnerstohelptransport
productsfromdistributioncenterstoend‐markets.Underliningtheimportanceofbuilding
aneffectivenetwork,DavidSmall,managingdirectorofd.LightAfrica,recentlystatedthat
“productisking,butdistributionisGod”(Adamson,2014).
Thesechallengescanmakeasolarlanternprojectunviableunlessitisableto
managethecostofitsoperationsandestablishasystemofreachinglast‐milecustomers.
FortheSELFproject,itwasimportanttominimizetheimpactofdistributiononthe
organization’slimitedresourcesinHaiti.Purchasingvehiclesandhiringalanternsales
teamwasnotanoption.Luckily,Micamahasover60yearsofexperiencedistributing
productsinHaitithroughitsaffiliatedmattressbusiness.Thedistributionportionofthe
projectwillbeentirelyhandledbyMicamaandtheirpartners,relievingtheneedforSELF
tobuilditsownnetwork.
Tominimizeitsowncosts,ratherthantransportinggoodsfromitswarehouseto
remotevillages,Micamaleveragesitspartnershipwithmicro‐entrepreneursaroundthe
countrytoreachlast‐milecustomers.Whendistributinglanternsinthepast,Micamasells
themtomicro‐entrepreneurswhomaketheultimatedeliveryoftheproducttoBOP
consumers.Micamahasaseriesofroutesthatitoperateswithatruckstockedaccordingto
orderstheyhavereceivedfromtheirentrepreneurpartnerssincethelastdelivery.The
countryisdividedintoninesuchroutesthatconnectMicama’scentraloperationsinPort‐
au‐Princewillmajorcitiesaroundthecountry.Micro‐entrepreneursplaceorderswith
Micamaviamobilephone,andarrangetomeetwiththecompanytruckasitpassesnear
theareathattheyserve.Micamatypicallystocksitstruckswithasurplus,knowingthat
impromptusaleswilloccuroverthecourseofthedistributiontrip.Fortheirown
transportation,entrepreneursusuallypurchasesmallenoughquantitiesoflanternstoput
themonthebackofmotorcycles,orothermodesoftransportationcommonlyavailablein
remoteareas.
Thissystemallowsthecostsandlogisticsofbringingproductstomarkettobe
distributedbetweentwokeypartners–Micamaandthenetworkofmicro‐entrepreneurs.
Eachentitymanagestheirowncostsandaccountsfortheminthepricesthattheycharge
thenextlinkinthesupplychain.Theroleofthemicro‐entrepreneursinthissystemis
47
crucial.ThisisakeyvalueofMicama–notonlydotheyalreadyhaveanestablished
networkofentrepreneurpartners,buttheyhavedirectconnectionstomanymorethrough
theirengagementswithFonkozeandCAREInternational–anothernon‐profitoperating
nationallyinHaiti.
Forthissystemtofunction,othercomponentsarenecessary.Inparticular,financing
allowsentrepreneurstopurchasequantitiesoflanternsthatwouldotherwisebe
impossible,andtrainingprovidedbyMicamaensuresthattheywillbeabletoclearly
communicatethebenefitsofsolarlanternstotheend‐users.
Program Financing ProgramfinancingfortheSELF‐MicamaSoleysolarlanternprojectisacrucialpiece
forthesuccessoftheprogram,bothintheshorttermandinthelongterm.Therearethree
majorpartnersintheprogram:Fonkoze,Micama,andSELF.FonkozeisthelargestMFIin
Haiti,withbranchofficesalloverthecountry.Duetoitssize,itisabletoreachthe
country’spoorestandmostremoteregionsandservemorethan200,000BOPclientswith
afullrangeoffinancialservices.Inaddition,itprovidesover60,000womenwith
microloans,businesstraining,education,andhealthcareservices(Fonkoze,2012).
FonkozehascollaboratedwithTomAdamsonandMicamaSoleyonpriorprojects,andthey
haveestablishedasolidworkingrelationship.ThisalsomakesFonkozeanidealpartnerfor
themicrofinanceaspectoftheproject.
TheSELF‐IDBgrantawardsatotalamountof$150,728towardsthesolarlantern
project,outofwhichapproximately$100,000isallocatedtowardspurchase,shipping,
customsandstorageoflanterns.Afurther$30,000isallocatedtoimplementationand
distributionand$13,000areallocatedtomonitoringandevaluationoftheprogram.The
MastersTeamandTomAdamsonjointlycameupwithauniquefinancingplantomakeuse
ofthebudgetedfundsinthemostefficientandconvenientmanner.Detailsofthatplanare
outlinedbelow.
Thetotallandedvalueofthelanternsmustbe$100,000tocomplywiththegrant.
Thatbudgetedamountmustcovertheproductorder,shipping,handling,andHaitian
customsfees.Ratherthanpurchasingthelanternequipment,SELFwilltransferthe
$100,000toFonkozetosetuparevolvingloanfundforthelastmilemicro‐entrepreneurs.
MicamaSoleywillthenpurchaselanternsworth$100,000andsellthemtothemicro‐
entrepreneurs,whowillusethesmallscaleloansfromFonkozetomaketheirpurchases.
Themicro‐entrepreneurswillpaybacktheloansinmonthlyinstallmentsofaroundsixto
twelvemonths,atapre‐determinedinterestrate.MicamaSoleywillrecoveritsinvestment
inthelanternsfromsalestotheentrepreneurs.Fonkozewillrecoverallthemoneyfrom
themonthlyloanrepaymentsmadebyentrepreneurs,plusanadditionalinterestpremium.
Thus,assumingthissystemworks,eachpartnerinthenetworknotonlycoversthecosts
associatedwiththeirinvolvement,butisevenabletoearnasmallprofit.Oncetheyhave
48
purchasedanywherefromonetotwentyormorelanterns,themicro‐entrepreneurswill
thentraveltoruralvillagesintheCentralPlateauandresellthemtotheend‐users,
recoveringtheirinvestmentandensuringtheirabilitytosatisfytherequirementsoftheir
loan.Theend‐usersbuythelanternsfromthemicro‐entrepreneursthroughaone‐time
upfrontpayment.
Asothersectionsofthisreporthavepointedout,theUS$15‐$25thatanend‐user
mightpayforalanternissometimestoomuchforpoorBOPfamiliestomanage.Becauseof
this,thefeasibilityofend‐userfinancingandatemporarylanternconsignmentmodelwere
alsoinvestigated.BasedonpriorexperiencewithlanterndistributioninHaiti,Micama
Soleydeterminedthatthecostsofadministeringanend‐userfinanceschemecurrently
makesuchanarrangementimpossible.Themicroscopicsizeoftheloans,thechallengesof
communicatingwithruralpopulations,andthelackofcreditworthinessofmostrural
familiesalldriveupthecostsofend‐userfinancingprograms.Inothercountries,suchas
KenyaandTanzania,mobilepaymenttechnologyhasenabledanexpansionofend‐user
financing.Tobesuccessful,however,thosenetworksrequirethousandsof“registered
agents”whocanusetheirphonetomakepaymentsonbehalfofsmall‐scaledebtors.In
Haiti,thereareonlyafewsuchagents,andalmostallofthemarelocatedinPort‐au‐Prince,
farfromwheretheywouldbeneededintheCentralPlateau.
Anotherstrategythatwasexploredtotrytolowerthecostbarrierofthelanternsis
togivethelanternsoncredittotheend‐usersforaroundtwoweeks,afterwhichtheend‐
usersdecideswhetherhewantstopurchasethelanternornot.Thisallowsfamiliesto
understandthesignificantpositiveimpactthatlanternswillhaveontheirlivesbeforethey
arerequiredtocommittoapurchase.Oncetheyseethattheywillbreakevenwiththe
purchaseofalanternwithinafewshortmonthsthankstolowerexpendituresonkerosene,
candles,andbatteries,oftentimesnofurthermarketingisnecessary.AsChapterIshowed,
manyfamiliesalreadyspendsignificantportionsoftheirincomeonenergyservices,and
althoughalanternisasizableinvestment,thebiggestchallengesolarlantern
entrepreneursfaceiscommunicatinglanternbenefits–notthefactthatfamiliesare
completelyunabletoaffordthem.Thetemporaryconsignmentstrategyisparticularly
helpfulinareaswherelanternswerepreviouslyunknownandthereforehavenolocal
championstocommunicatetheirbenefitstotheirpeers.Micamahasalreadytestedthis
strategywithgreatsuccessandwillencourageallentrepreneurstofollowthisapproach
duringtheirMicama‐sponsoredtrainingsessions.
MicamaSoley’spreviousprojectshavehadagrossprofitmarginof32%.Assuminga
wholesalelanternpriceofUS$10,thesalepriceperunittotheresellerswillbe$14.70.Itis
estimatedthatmicro‐entrepreneurschargea15%premiumforfinalsaletotheend‐user,
implyingafinalpriceofabout$18perlantern.Itisimportanttorecognizetheexistenceof
twoseparateprofitmarginsinthesaleofthelanterns–oneatthebulklevelandoneatthe
49
retaillevel.Althoughtheexistenceoftwopremiumsincreasesthefinalpricetoend‐users,
priorMicamaprojectsinHaitihavedemonstratedthatthisisnotanimpedimenttotrade.
Marketing, Consumer Awareness, and Entrepreneur Training Themarketingandconsumerawarenessaspectoftheprojectwillbemanaged
throughapartnershipestablishedbetweenMicamaandFonkoze,andsupportedbyGlobal
Partnerships(GP).GPisanonprofitimpactinvestorthatinvestsinsolutionsthatalleviate
povertyandeconomicallyempowersunderprivilegedcommunitiesincountriesinthe
LatinAmericanandCaribbeanregion(GlobalPartnership,2014).GPhasinvestedin
Fonkoze’soperationsinhealth,micro‐entrepreneurshipandmorerecentlyingreen
technology,throughwhichthesolarlanternaccesshasbeenmadepossible.Fonkoze’s
micro‐entrepreneursreceivetrainingthroughMicama’sestablishedtrainingprocess
wherebyFonkoze’sborrowinggroup“chiefs”,becomeretailersofsolarlights.Thisgives
participantsaccesstoasupplementarysourceofincome(GlobalPartnership,2014).Inthe
partnershipbetweenSELF,Fonkoze,andMicama,thesupportthatGPprovidedwillcome
fromashareoftheIDBgrantdirectlytoMicamawhichwillthentrainmicro‐
entrepreneurs.Micamaestimatesthatbetween200and300micro‐entrepreneurscouldbe
trainedwiththeportionofgrantmoneyallottedfortraining–farmorethantheminimum
necessarytodistributethefullamountoflanterns.
ThemethodologybehindthetraininghasbeenadaptedfromaBarefootPower
“trainingfortrainers”coursegiventoMicamaemployees.Inthetrainingprogram,future
entrepreneurstaketurnsroleplaying,withthesellerhighlightingpotentialbuyers’current
energyexpenditures.Theyencouragelanterncustomerstocomparetheircurrentcosts
withthesavingsandnon‐financialbenefitsthattheywillreceivewiththepurchaseofa
solarlantern.Thisprocessisdemonstratedwiththehelpofasellsheet,displayedinFigure
14,thatwalkseachbuyerandsellerthroughasetofquestionsthatassessthebuyers’
currentexpensesandneeds.Additionally,thesellershighlightthelossesthatapotential
buyermighthavewithoutalantern:forexample,forasmall‐scaleagriculturaltrader,not
havinghis/herphonechargedcouldmeanmissedbusinessopportunities.Theriskthat
kerosenelampsposetothebuyers’families’healthduetoindoorpollutionorburnsisalso
highlightedbytheseller.InordertobettercommunicatewithitsaudienceinHaitithe
originalpamphletfromBarefoothasbeentranslatedtocreole(Adamson,2014)(Figure
14).
50
Figure 14. Barefoot Training Sheet Adapted to Micama AnotherawarenessstrategythatMicamahasimplemented,withthesupportof
FonkozeandGP,wasthepurchaseofasoundtruckthathelpsincreasepenetrationinareas
withverylittleawarenessofsolarlanterns.Thesepromotioncampaignsexposecustomers
toaffordablesolutionsinthesamewaythatsuccessfulcasesinAfricahavedone.Theidea
ofthetruckwastoincreasethenumberofsalesperregion,supportingthesaleprocessof
solarretailersinruralareasconsideredmostimportantbythem.Intheseareas,where
Micamahasestablisheddistributionroutes,thevehiclehasbeenusedtoprovideaplatform
fortheproductstobedisplayedandameansofsolicitingparticipationfromlocal
populations.Thesalesteamtriesleavescontactinformationthatallowslocal
entrepreneurstofollowupwithinterestedcustomerslater.Inpractice,however,aftera
sevenmonthtrialperiodthetruck’simpactonsaleswasrevealedtohavehadanegligible
impactonsales(Adamson,2014).Currently,FonkozeandMicamaareevaluatingtheir
programsimpactandstrengthsthroughinterviewswiththirtyoftheresellerstrainedby
thepartnership.
51
Lantern Product selection Lantern Quantity Originally,the$100,000ingrantfundingwasintendedtobespentonpurchasing
lanternequipment.Throughtherevisedengagement,SELFwillspendthefundsto
establisharevolvingloanfundthroughFonkoze,whileMicamawillhandlethepurchasing
necessarytomakelanternsavailabletothesoon‐to‐be‐trainedentrepreneurs.Forthesake
ofcooperatingwiththeoriginaldesignoftheproject,Micamahasagreedtopurchasethe
exactdollarvalue’sworthoflanternsaswasoriginallyintendedaccordingtotheIDBgrant,
althoughthesenewlanternswillcontributetoandbecombinedwithitsexistinglantern
inventory.
Tounderstandhowmanylanternswillbemadeavailablewitha$100,000
expenditure,shippingandcustomsmustbeconsidered.Thetotalamountmustbedivided
by1.22,wherecustomsis22%ofthelandedvalue.Therefore,ifthelandedvalueis
declaredtobe$100,000,theactualamounttopurchasefromd.Lightwillbearound$83K,
amountingtoroughly5,000lanternsafterthebulkdiscount.Theexactnumberoflanterns
tobepurchasedisneitherentirelyclearatthepointofcompilingthisreport,neitherisit
highlyrelevant.Itwouldbemuchmoresoiftheprojectintendedtohandthelanternsout
forfree,butbecauseofthenatureoftheproject’sdesign,oncetheinitialorderis
exhausted,Micamawillsimplyordermorelanterns.Beginningwithaninitialorder
comparabletothatstipulatedintheoriginalformulationofthegrantagreementmerely
providesassurancetotheprojectSELFthatMicamawillhaveastrongincentivetoensure
thesuccessofthedistributionandtrainingprogram.Untilthelanternsaresold,$100,000
ofcapitalwillbelockedupinsolarlanterninventory.
Solar Lanterns ‐ Products and Manufacturers Selectingtherightproduct(s)fortheprojectisakeyfactorinthemodel’seventual
success.Forrisk‐averseindividualsattheBOP,highdemandsareplacedonboth
performanceandprice.Inthesolarlanternmarket,therearenumerousbrandsavailableto
choosefrom,makingitchallengingtoselectthebestsuitedbrandandmodel.
Inordertonarrowdownthewidevarietyofchoicestoaselectfewparticularlywell‐
suitedtotheneedsoftheproject,theteamestablishedasetofcriteria.Weassessedthe
numberofdifferentmodelseachbrandoffered;whetherthefocusoftheirproduct
developmentwasspecificallytheBOP;andiforganizationscurrentlyusedtheirproducts.
Withtheseinitialscreens,somesmallcompaniesthatmanufacturedonlyoneortwo
productswerenotconsidered.Thelogicbehindthisdecisionwasthatlarger
manufacturerscouldofferbetterpricesduetoeconomiesofscaleandcouldleveragetheir
existinglogisticalcapacitiestoefficientlydeliverproductstoHaiti.Themajorityofthese
smallmanufacturerswerelocalAsianandAfricancompaniesthatsuppliedlocal
organizationswiththeirproducts.
52
Toscreentheremainingoptions,theteammadeuseofthevaluableresearch
completedbyLightingAfrica.LightingAfricaisaprogramjointlyfundedbythe
InternationalFinanceCorporationandtheWorldBankthatresearchessolutionsto
improvingaccesstolightingsolutionsinunelectrifiedregionsofAfrica(UNDP,2012).The
program’swebsiteprovidesinformationonseveralorganizationsthatworkinthelighting
space,aswellasacomprehensiveanalysisoflanternproductscurrentlyavailableinthe
market.LightingAfricaiscommittedtoreducingmarketspoilagethatresultsfromthe
distributionofpoorqualityproducts(IFC,2012b).Fromtheremainingmanufacturers,
otherproductswereaddedtothelistthathadnotyetpassedLightingAfrica’squality
testingprogram(seeAppendixIforalistofconsideredproducts).Theassumptionbehind
thisdecisionwasthatifaparticularmanufacturerhadmorethantwoproductsthat
alreadycompliedwiththequalitystandardsfromLightingAfrica,thenwhetherornottheir
otherproductshadbeentestedyet,theywouldalsobeofsimilarorhigherquality.
ThebulkoftheMastersTeam’sscreeningworkoccurredbeforethepartnershipwith
Micamahadbeenidentified.OnceitwasclearthatMicamawasSELF’sbestoptionforan
on‐the‐groundpartners,wecross‐checkedourlistwiththeproductsthatMicamahad
previouslydistributedinHaiti.Notsurprisingly,threeofourtopchoiceswereinfactthe
threeproductsthatMicamastocksandcurrentlysells.ThecompanyalsoholdsLighting
Africainhighesteem,onlypurchasingproductsthathavepassedtheirqualitytesting
program.FortheprojectinHaiti,becauseMicamawillbetheentitymakingthedirect
purchasefromthelanternmanufacturer,andbecausethebrandscurrentlysoldbyMicama
matchtheteam’squalitycriteria,werecommendleveragingtherelationshipsthatMicama
alreadyhasinplacewithlanternmanufacturers.Thosebrandsare:BarefootPower,
MarathonerPower,andd.LightDesign.
Tominimizelanternpurchasingcostsandtherebymaximizethenumberoflanterns
thatwouldbemadeavailabletotheentrepreneurnetwork,Micamasuggestedthatthe
$100,000bespentononlyonebrand,withsalesoftheothertwobrandsbeingfulfilled
fromexistinginventory.Amixoflanternsmanufacturedbyd.LightDesignwasselectedfor
thatpurpose.Micamaalreadyhasastrongrelationshipwiththemanufacturer,andplacing
onlyoneorderwillsignificantlyreduceshippingcosts,asalllanternswillshipinone
containerfromShenzhen,China,toPort‐au‐Prince,Haiti.Furthermore,becausethevolume
purchasedfromthemanufacturerisgreaterthanitwouldbeifmodelswereselectedfrom
multiplecompanies,thediscountwillalsobehigher,allowingformorelanternstobe
purchasedforthesamecost.ThethreebrandsthatMicamaandSELFwilleventuallywork
withinHaiti–BarefootPower,MarathonerPower,andd.LightDesign–areexploredin
greaterdepthbelow.
53
Barefoot Power BarefootPowerisabusinesshasmanufacturedaffordableportablesolarsolutions
fortheBOPinanefforttoincreaseenergyaccessandalleviatepovertysince2005.
Barefoothasfocusedonsolarsolutionsthatprovidelightingandphonecharging
capabilitiesinordertofulfillbasiclightingneedsfromlow‐incomepopulationsin
developingnations.Intheirmission,Barefootstatesthatprovidinglightingasafirststepto
breakthedependenceoninefficientandharmfullightingsources.Inadditionto
manufacturingtheseproducts,Barefootisinvolvedinseveralprojectsthatdistributethese
lowcostlightingsourcestolowincomepopulations.CurrentlyBarefootoffersproducts
rangingfromsolarhomesystemssolutions,suchastheBarefootConnect,tosolarlanterns
liketheFireflyandBarefootGo.
TheFireflyseriesoffersportablesolutionswithfivedifferentproductsincludingthe
FireflyMini,theFireflyMobileLamp,theFireflyFamily,theFireflyMobileUltraTorchand
theFireflyFastPhoneCharge.Thisseriesiscompletewithphonechargingcapabilitiesand
lighting,withtheexceptionoftheFireflyFastPhoneChargethatexclusivelycharges
phones.Theseproductsareequippedwithwarrantiesvaryingfrom12to24months.
BarefootcurrentlyhasfourproductscertifiedbyLightingAfrica,whichincludethe
FireflyMiniandtheFireflyMobileLamp,representedrespectivelyinFigure15andFigure
16.Thesemodelsdifferontheavailabilityofdifferentsettingsaswellasontheirmobile
phonechargingcapabilities.TheFireflyMiniisasimplermodel,withonlyonebrightness
settingthatprovidesfourhoursoflightatanintensityof36lumens.TheFireflyMinihasa
twelvemonthwarranty,butdoesnotofferthepossibilityofmobilephonecharging.The
FireflyMobileLamp,ontheotherhand,isamoresophisticatedsolarlanternprovidingtwo
differentbrightnesssettingsaswellasmobilephonecharging.
Figure 15. Barefoot Firefly Figure 16. Barefoot Mobile Lamp 54
Marathoner Power MarathonerClean&LeanPowerdesignsalltheirproductsforoff‐griduseandbuilt
inpower‐usagemonitoringcapabilities(Marathoner,2012).Theyunderstandtheunique
andimportantrequirementsoftheircustomersandpartneringorganizations,andproduce
highqualityproductsatreasonablecost.Marathonerproducesfourdifferenttypesofsolar
lanterns.AlllanternpackagescomewithcrystallinePVpanelsandbuilt‐inbatteries:the
MB2‐090(Figure17)provideslightingonly;theMB2‐200provideslightingandmobile
phonechargethroughastandardUSBplug;theMB2‐290andMB2‐380(Figure18)provide
bothlightingandmobilephonechargewithasinglecrystallinePVpanelandmultiple
lanternsincludedinthekit(Marathoner,2012).
TheMB2‐090andMB2‐380modelsare2012GlobalLightingOutstandingProduct
Awardwinners.MarathonerLanternscanusuallybefullchargedinsixhoursinanormal
day.Differentmodelsprovidedifferentamountoflightingrangingfrom92lumensto200
lumensatthehighestsetting.Forthelanternmodelswithamobilephonecharging
function,chargingcableswithmultiplemobilephonechargeadaptorendsalsocome
withinthelanternpackage.AllMarathonerBeaconTMsolarlanternmodelsareequipped
withsuper‐efficientLEDbulbsandpowerfullithiumbatteries.Themicro‐processorcontrol
technologyequippedwithalllanternmodelsensuresthehighestenergyefficiencyanda
longerbatterylife.WaterproofbodydesignensurestheperformanceofMarathoner
lanternmodelsinrainyandhumidenvironments.Alllanternmodelscomewithatwoyear
warrantyprovidedbyMarathonerforthewholepackage.
Figure 17. Marathoner MB2‐090 Solar Lantern Model Figure 18. Marathoner MB2‐380 Solar Lantern Model
d.Light Design d.LightDesignisafor‐profitsocialenterprisewiththepurposeofcreatingsolution
forcustomerswithoutreliableaccesstopower.d.Lightdesignssmall‐scale,distributed
renewableenergysolutionsforhouseholdsandsmallbusinessestoprovidetheaccessand
55
payforpowerforthose2.6billionpeoplegloballywithoutaccess
toreliableelectricity.d.Lightoffersfourproducts,includingtheS2
(Figure19),S20(Figure20),S300(Figure21),andD20.Each
productcomeswithatwo‐yearfreereplacementandmaintenance
warranty(d.light,2014).TheCentralPlateauprojectwillnotmake
useoftheD20model,asitisasolarhomesystemdesignedfor
Figure 19. D.Light S2 largerpowerneedsandwealthiercustomers.Allthreeremaining
Model models–theS2,S20,andS300–arebuiltwithefficientLEDs,and
equippedwithmultiplebrightnesssettingsthatofferfromfourto
sixteenhoursoflightdependingonthesetting.TheS300hasan
additionalnightlightsettingthatcanoperateforuptoone
hundredhoursafterafullcharge.BothS2andS20comewithan
adjustablehandle,makingthemeasytocarryforoutdooruseorto
behungforindoorlighting.AlthoughS300doesnothavean
adjustablehandle,thedesignofacurvedlightingsurfaceprovides
lightatawideangle.Thetopstrapallowsittobehungto
illuminateanentireroomoroutdoorareaaswell.TheS300comes
withaportablesolarpanel,whichisconvenientforcharging.In
additiontotheconventionallightingfunction,theS300also
providesamobilephonechargingoption.Abuilt‐inbattery
Figure 20. D.Light S20 indicatorontheS300displaysthelantern’slevelofcharge.All
Model threemodelsarebuilttolastforatleastfiveyears.
Thefinalbrandthatwaschoseninthis
projectisd.Lightbecaused.Lightnotonly
fulfillsalltheselectingcriteriathathad
mentionedinthefirstpartinthissectionand
alsod.Lightisexcellingotheroptions.Thisis
alsowhatthebrandthatMicamahasthemost
inventory,meaningthattheselectionprocess
thatusedinthisprojectcaneffectivelyfind
themostappropriateandfittedproductfor
BOP.
Figure 21. D.Light S300 Model After‐Sales Service and Product Maintenance Inordertoeffectivelymonitorthelast‐milesellingprocessandcreateanup‐to‐date
informationflow,Micamaintendstobuildatextmessage‐basedsystemusingsoftwarethat
56
hasbeenproventoworkinAfricansolarlanterndistributionprograms.Afterevery
successfulsale,Micamawillrequiretheentrepreneurstosendthematextmessagewith
theentrepreneur’snameandnumber,thebuyer’snameandnumber,aswellastheproduct
serialnumbertokeeptrackofthesellingprocess.Withthisinformationflow,Micamawill
beknowhowentrepreneurs’businessesarefaring,whichmodelismorepopular,how
soonwillthestockneedtoberefilled,andiftheentrepreneursneedanysellingassistance.
Thed.Lightlanternmodelscomewithatwoyearfreereplacementwarranty,and
thiswarrantyprogramisusuallyfulfilledbytheorganizationdistributingthelanterns.
Duringpreviousprograms,BarefootPowerhadtriedtofixdamagedlanternsattheend‐
user’shouse.Thisapproachhadgeneratedanumberofproblemssuchastheavailabilityof
maintenancetechnicians.Nowd.LightandBarefoothavereplacedtheirmaintenance
programswithatrade‐insystemfordefectivelanterns,providedthatthelanternisstill
withinwarranty.Fortheend‐usersontheCentralPlateau,Micamawillfulfillthelantern
warrantyprogram.Brokenlanternswillbecollectedandcheckedbylocalentrepreneurs,
andaslongasthelanternisnotvisuallydamaged,areplacementwillbeprovidedfreeof
chargeimmediatelythereafter.End‐usersareencouragedtoopenandcheckthelantern
immediatelyfollowingtheirpurchasetomakesurethatthelanternhasn’tbeentampered
with,ordamagedinshipping.
57
SECTION 2. Future Steps Forthisproject,thedesignphaseislargelycomplete,andhasbeenoutlinedinthe
precedingchapter.MicamaandFonkozearereadytobeginbuildingthenewprogramsthat
willbenecessarytocarrytheprojectforward.Basedontheirpriorexperienceinthesolar
lanternfieldinHaiti,Micamapredictsthatthedistributionof5,000lanternsshouldnotlast
morethantwelvemonthsfromtheinitiationoftheproject.
Aswehavesoughttoemphasizethroughoutthisreport,theproject’sdesignis
intendedtocarryitforwardindefinitelyintothefuture,positivelyimpactingthelivesof
ruralHaitiansforyearstocome.Ifthemodelworks,theprojectcanbescaleduptobenefit
otherpartsofthecountry,region,orevenworld.Forthispotentialtoberealized,itis
crucialfirst‐and‐foremostthattheprojectbeimplementedmore‐or‐lessaccordingtothe
planthattheMastersTeamhasbuiltwithSELF,Micama,andFonkoze.Thiswillrequirean
ongoingdialogbetweenallpartnersandcooperationtoovercometheinevitablechallenges
associatedwithoperationalizingsuchacomplexprogram.Oncetheprogramisinplace,in
ordertosustaintherevolvingloanmodelandentrepreneurshipnetwork,itwillbevery
extremelyimportanttotrackperformancemetrics.Thiswillhelpinformwhetherornot
adjustmentsareneededbeforeissuesbecomeentrenched.Thefollowingchaptertakesa
stepbacktocriticallyassesstheprogramthattheteamhasbuiltwithSELFandMicama.
Specifically,itevaluatesthepotentialsocialimpactsoftheprojectandanalyzesthe
strengthsandweaknessesofthebusinessmodel.
58
CHAPTER III. A Critical Assessment of the Project Introduction Inthepreviouschapter,thevariousaspectsoftheprojectwerediscussedseparately.
Whileassessingthemindividuallyallowsforabetterunderstandingoftheirkeyelements,
extraanalysisofhowthemodelworksaswholeisalsoneeded.ChapterIIIpresentsa
criticalanalysisofthestrengthsandweaknessesofthecurrentprojectdesignusing
analyticaltoolsacquiredoverthecourseoftheSchoolofNaturalResourcesand
EnvironmentmastersprogramattheUniversityofMichigan.Firstly,itidentifiesthe
variousimpactsthattheprogramcouldhaveonthelivesoflanternend‐usersandmicro‐
entrepreneurs.Secondly,itexaminesthebusinessmodel,highlightingstrengthsand
weaknessesofwhichprojectpartnersshouldbeaware.
Theanalysisofthesocialimpactandbusinessmodelwereconductedusingtwo
frameworksdevelopedbyProfessorTedLondonoftheRossSchoolofBusinessatthe
UniversityofMichigantoanalyzeoperationsattheBOPthatofferedservicesorproductsto
theunderprivilegedpopulations.Thefirstframeworklooksatthreecategoriesofwell‐
beinginordertodeterminehowaprojectincreasesordecreasessocialwelfare.Becauseof
theteam’sfamiliaritywithFe‐YoBien,theCentralPlateaucommunityvisitedinOctober,
2013,thesocialimpactassessmentfocusesonthattownasaproxyforotherareasthatwill
beaffectedbytheprojectinthefuture.
Thesecondframework,asitsnamesuggests,assessesthebusinessmodelusing
threedifferentcategories:resources,structure,andmetrics.Eachcategoryrelatestoa
differentaspectofthebusinessmodelinisolation,buttheframeworkassesstheoverall
robustnessofthebusinessplanatthesametime,allowingforanearly‐stageassessmentof
howwellaprojectissettingitselfupforsuccess.Bothframeworksallowforthe
identificationofpossibleweaknessesthatarelateraddressedinChapterIV.
59
SECTION 1. Social Impact Assessment Economic Well‐Being MostresidentsofFe‐YoBiendependheavilyonagriculturalactivitiestosupport
theirfamilies.Agriculturalharvestsareseasonal,canbeeasilyimpactedbyextreme
weather,andareusuallylowinvolume.Theentrepreneursthatwillbeinvolvedinthe
solarlanterndistributionprogramcanexpecttoearnasupplementalincomebyselling
lanterns.Theprogramprovidestheentrepreneurswithanewaccesstofinancialcreditand
loans.Evenwithlittleornocredithistory,motivatedentrepreneurscaneasilygetloan
fromFonkozeorACMEtopurchaseandselllanterns,payingbacktheirloanswiththeir
earnings.Throughthisprocess,theentrepreneursareabletobuildupfinancialcreditif
theyareabletopaybacktheirloansandinterestsontime,meaningthattheywillhavea
betterchanceofgettinghigherloansinthefuturetoexpandtheirpersonalbusinesses.
Incomefromsellinglanternsisexpectedtobemuchmorestablethantraditional
agriculturalgains.Aslocalpeoplegetabettersenseofthebenefitsofusingsolarlanterns,
demandforlanternsmayincrease.Therefore,astheprojectdevelopsandawareness
grows,entrepreneurs’salesvolumeswillgrowaswell,resultinginhigherincomes.
Kerosene,candles,andbattery‐poweredflashlightsarethemajorlightingfuelsin
Fe‐YoBien.Normally,peopleneedtopurchasekeroseneregularlytoburnforlighting.The
estimatedmonthlyexpenditureonkeroseneisroughlyUS$10perfamily.Ifthefamily
ownsamobilephone,theywillalsoneedtotraveltoachargingstationinBoucanCarre–
onehour’swalkfromtown–andpayforchargingservices.Basicsolarlanternswithout
mobilephonechargingcapabilitiesretailforbetweenUS$15and$20,whilemodelswith
chargerssellforaround$40.Forpoorruralfamilies,suchahighexpenditurecouldresult
inatemporaryfinancialcrisisimmediatelyfollowingtheirpurchase.
Inthelongterm,however,solarlanternscancreateeconomicvalueforfamiliesby
allowingthemtosavemoneythatwouldhaveotherwisebeenspentonkerosene.Solar
energyisafree‐of‐chargeenergysource,withlanternsprovidinglightingandpossiblyalso
mobilephonecharging,familieswillnotneedfurtherspendingonenergy.Moreover,with
theconvenientmobilephonechargingprovidedbysolarlanterns,individualscanusetheir
phonesmorefrequentlyandstayintouchwiththeoutsideworldmoreeasily.Thisinturn
willbeofgreathelptosmallbusinessowners,traders,andalsoforpeoplewhowishto
starttheirownbusiness.
Ifwetakeastepbackfromlookingintotheindividualeconomicbenefitfromsolar
lanternandlookatthecommunityasawhole,solarlanternscanbeagreatwayto
jumpstarteconomicgrowthinacommunitysuchasFe‐YoBien.Asdiscussedearlier,solar
lanternsnotonlybringinmoreincomebutalsohelpwithstartingandexpandinglocal
business.Furthermore,asthesolarlanterndistributionprogramexpandsintolargerareas,
therewillalsobeanopportunityforcommunitieslikeFe‐YoBientogetconnectedwith
60
othercommunitiesthroughthesameprogram.Therefore,potentialopportunitiesmaybe
createdfornewbusinessesthatspanmultiplecommunities.Onthedownside,peoplewho
getinvolvedinthesolarlanterndistributionprogramasentrepreneursmayhavelarger
economicgainthanpeoplewhoonlypurchaselanternforpersonaluse.Thissituationmay
createalargerincomegapbetweentheentrepreneursandotherlocalresidents.
Capability Well‐Being Trainingsregardingbasiclanternfunctioning,technology,andbenefitswillbe
providedbeforeentrepreneursactuallybeginsellinglanterns.Therefore,knowledgeof
advancedsolarlanterntechnologythatwaspreviouslyinaccessibleforpeopleinrural
communitieswillbemadeavailabletolocals.Thetrainingswillalsoprepareentrepreneurs
withbasicaccountingandmarketingskills.Thesetrainingswillprovideknowledgeand
skillsthatwillbenefittheentrepreneursfortherestoftheirlives,evenwhentheyno
longerworkwiththeprograminthefuture.Withthehigherandmorestableincome
gainedfromsellinglanterns,localentrepreneurswillbeabletoaffordabetterqualityof
life,andprovidetheirchildrenwithbettereducationopportunities.
Thegreatestimpactofburningkeroseneforindoorlightingarethetoxicfumes
releasedinthecombustionprocessandthehighriskoffiresiflampsareoverturned.With
solarlanternsprovidinglighting,alltoxicfumesandindoorairpollutioncausedby
kerosenewillnolongerbeathreattohumanhealth.Peopleandtheirfamilieswho
purchasesolarlanternscanexpecttobehealthierandhavealowerofrespiratorydiseases.
Childrencanalsostudywithsafersolarlanternsatnight.Asidefromhigherhealth
expectationsandtheeliminatingtheriskoffiresandburns,thehighqualityofsolarlantern
lightingcanprotectchildren’seyeswhentheystudyatnight.Theycanalsoexpectalonger
andbettereducation,sincetheirparentscansavemoneyfromkerosenepurchasingand
haveahigherbudgetforeducation.Moreover,astheentrepreneursadvertiseforthesolar
lanternstheyareselling,buyerscanalsogetexposedtothesolarlanterntechnology
knowledge,providingbuyersaknowledgegainaswell.
IntroducinganddistributingsolarlanternsinFe‐YoBienwillcontributeto
educatingthecommunitywiththehealthriskbroughtbykeroseneburning,newsolar
lanterntechnology,andtheconceptofsustainability.Aspeopleinthecommunitycan
expecttoreceivebetterandlongereducation,theaverageeducationlevelofthe
communitywillriseasyearspass.Therewouldalsobeahigherprospectforthefutureof
thecommunity,duetotheincreasingincomeofitsresidents,longerlifeexpectancy,higher
educationlevel,andeasieraccesstoouterworldthroughusingmobilephones.
Relationship Well‐Being Aslocalentrepreneursstarttosellsolarlanternsandbringinmoreincomefortheir
households,itispossiblethatwewillseeachangeinrolesinthesehouseholds.Afamily
61
memberinvolvedinthesolarlanternbusinessmaygainmorepowerandrespectinthe
householdsincehe/shewillprovidemoneyforthefamily.Ifthispersonhappenstobeata
previouslylowerpositionwithinthehousehold,servingasanentrepreneurmaygain
him/herahighersocialstandingposition.Thischangeinthehouseholdpowerstructure
maycausefamilyconflictasmemberspreviouslyathigherpositionsfeelthreatened.Ifthis
personhappenstobeatahigherpowerpositioninthefamily(suchasahouseholdhead),
thereisalsothepossibilitythatthispersonwillgainmorepoweroverthewholefamilyand
becomeanoverbearingleader.Besidesthepossibleshiftinhouseholdroles,entrepreneurs
areexpectedtogainmorerespectfromtheircommunities.Otherlocalresidentswillsee
theentrepreneursaspossessingspecializedknowledgeofsolarlanterns,abletoaccess
financialcredit,andabletogivetheirfamiliesabetterlife.
Fortheindividualsthatplantopurchasesolarlanternswithmobilephonecharging
capabilities,theywillhaveabetteraccesstopeopleoutsideFe‐YoBien,andwillbeableto
chargetheirphoneswhenevertheywant.Itwillbeeasiertostayintouchwithpeople
livinginotherareas,andreachouttonewnetworkconnections.Sincesolarlanternsare
expectedtosavefamilymemberstimefromcollectingtraditionalfuelsandtraveltophone
chargingcenters,thefamilywillhavemoretimetodedicatetootheractivities.Theymay
havetimetochatwitheachotherandcreatebetterrelationshipsamongfamilymembersas
wellaswiththeirneighborsandpeopleinthecommunity.
AccordingtothefieldsurveyweconductedinFe‐YoBien,theprimaryincome
sourceformostfamiliesisfromthesaleofagriculturalproducts.Withsomepeopleacting
asentrepreneurstoservethesolarlanternproject,unevenincomechangesbothamongall
residentsinFe‐YoBienandamongentrepreneursispossible.Peoplegainingmoremoney
bysellinglanternswillimprovetheirsocialposition,andthisisagreatopportunityfor
peopleatthebottomofthesocietytomakechangesforthemselves.Fe‐YoBienisstilla
verytraditionalandundevelopedarea;thechangeinpeople’seconomicandsocialposition
maybringuneasyfeelingsforthosenotabletoparticipateasentrepreneursandthose
earninglessthanfellowentrepreneurs.Thus,thereisaslightpotentialofsocialconflict
arisinginthecommunityastimegoeson.
Lightingatnightisalsobelievedtobelowercrimerates.Withmorepeopleowning
solarlanternsandbeabletolighttheirwaywhenwalkingoutsideatnight,thewhole
communitywillbesafer,especiallyforwomenandchildren.Furthermore,thedistribution
ofsolarlanternswillalsogivethevillageofFe‐YoBiena“green”starttoitseconomic
development.Thewholecommunitywillnotonlyhaveacleanandsafesourceofenergy,
butwillalsocreateafriendlyrelationshipwithitssurroundingenvironmentbyusinga
renewableenergysource.
62
SECTION 2. Assessment of the Business Model ThepartnershipbetweenSELF,Fonkoze,andMicamainHaitiseekstoprovidea
largenumberoflast‐mileconsumerswithlowcostsolarlanternsolutions.Thispartnership
buildsoffanexistingpartnershipbetweenFonkozeandMicamawiththeobjectiveofvastly
expandingthenumberofmicro‐entrepreneursalreadyinvolvedinthepartnership.The
additionofarevolvingloan‐fundtoprovidesupporttofuturemicro‐entrepreneursadds
complexitythecurrentoperation,resultinginamodelthathasnotbeenfullytestedbefore.
Thefoundationforthenewpartnership,however,isasuccessfulprogramthathasallowed
Micamatopassthe100,000lanternssoldmark.Forthatreason,SELFentersthepicture
leveragingitspartner’spriorexperience.Withtheinitialgrantmoney,Micamahas
estimatedthatanumberbetween200‐300micro‐entrepreneurscanreceivetraining.The
lanternswillbesoldinitiallytomicro‐entrepreneursfromFonkoze’sbranchesonthe
CentralPlateau,totalingnineroutesthatareservedbyMicama.Thenumberofsolar
lanternssoldisthenrecordedbyMicamaandwilllaterhelpSELFandFonkozedetermine
theeffectivenessoftheirstrategy.
Resources Intermsofresources,SELFwillutilizetheIDBgranttosetuparevolvingloanfund
atFonkozethatwillsupporttheentrepreneurshipnetwork.Thepre‐existingpartnership
betweenMicamaandFonkozeallowforthegranttoeffectivelyimpactthosethatcan
benefitthemostbytheadoptionofenvironmentallysafelightingoptions.Micamaoffers
thispartnershipitssupplyofvariedtypesoflanternsanditssuccessfultrainingprogram
thatenablesmicro‐entrepreneurs.Micamahassetupninedifferentdistributionroutesthat
servesomeofFonkoze’sbranchesinHaiti.Fonkoze’sloansupportandthelow‐cost
trainingprogramprovidedbyMicamaaresourcesofcompetitiveadvantageformicro‐
entrepreneurs.Byparticipatingintheproject,micro‐entrepreneurswillhaveaccessto
resourcesunavailabletothevastmajorityofHaiti’spopulation.
Conversely,businesssuccessforentrepreneursisthreatenedbydependenceonthe
partnershipwithFonkozeandthelackofend‐userfinancingforthosepurchasingthe
lanternsfromthem.Theywilldependontheirownacquiredmarketingabilitiesandthe
financialmeansoftheircustomerstodrivethebusinessmodel,asnoaspectoftheproject
willmakeadditionalfinancialresourcesavailabletotheend‐users.
Metrics Intermsofmetrics,throughtheirrolesintheproject,MicamaandFonkozeare
directlyconnectedtothemicro‐entrepreneurs’salesontheground.Micamacurrently
measuresitssalesnumberswiththeuseofQuickbooks,anaccountingandfinancial
software,thatallowsfortheprovisionofmonthlyreportsontheprogressofsales.More
recently,however,Micamaisintheprocessofadoptingsoftwarethatusestextmessagesto
63
keeptrackofentrepreneurs’salesalmostinstantly.Thesystem,developedbyanAmerican
organizationworkinginAfrica,allowsforthesellertoregisterthebuyer’snameand
productnumberineachtextreferringtoasale.Thisprocesstapsintotheexistingmobile
phonenetworkinHaiti.Thesemetricsallowforabetterestimationoftheareasthatneed
moresellers,aswellasgivingabroadperspectiveontheprogressoftheprogram.
Structures TheprojectleveragestheexistingnetworksofMicamaandFonkozetoprovide
financingforentrepreneurswhowillbuyandreselllanterns.Thiscanbothbenefitthe
microfinancebankbyofferinganewrevolvingloanfundandsustainingtheirbusiness,
whilesimultaneouslycreatingopportunitiesforlocalentrepreneurs.Thelanternmarketin
HaiticanalsobeexpandedsincethoseentrepreneurscanpotentiallyattractHaitians’
broaderinterestinsolarlanterntechnology.ForSELF,bypartneringwithestablished
organizationsinHaiti,theriskoffailurecanbesignificantlyreduced.Micamawillprovide
trainingfortheentrepreneursbuiltonaprevioussuccessfulprogramfromBarefootthat
willeducatemicro‐entrepreneursinmarketingstrategies.Giventhepreviousexperienceof
sellinglanternsinHaiti,thiscanbeseenasasignthatthisprojectcansucceed.
Furthermore,thefreetwoyearreplacementwarrantythatcomeswiththed.Lightlanterns
cancovertheriskofproductfailureandlessentheburdenofresponsibilityformicro‐
entrepreneurs,whowillbethedirectpointofcontactforend‐users.
However,thelackofasystemforcontrollingtheultimateretailpriceoflanternsisa
riskthatcouldcausechallengesforthebusinessmodel.Inaddition,theimporttariffof
22%forlanternsishighandrepresentsabarriertosellinglanternsatalowercost.This
couldbeaweaknessforalong‐termoperationduetotherigidfinancialconstraintsofthe
BOPlanterncustomers.Becausethebusinessmodelwillnotbesubsidizedinthefuture,
anycostswillbepassedondownthevaluechaintotheend‐consumer.Furthermore,after
theexpirationoftheoneyearwarrantyperiod,maintenanceissuescouldbecome
challenging.
64
CHAPTER IV. Outlook for the future: Risk and Recommendations TheSELF‐Micamaprojecthasthepotentialtolaythefoundationforasuccessful
longtermpartnershiptodeliversolarlanternsolutionsforruralHaitianpopulations.
However,thereareanumberofrisksthatmustbeseriouslyconsidered.TheMastersTeam
alsohassynthesizedashortlistofrecommendationsforSELFthatwefeelwillaugmentthe
relevanceandimpactoftheSELF‐Micamaproject,andlaythefoundationforanyfuture
projectSELFchoosestoundertakeinthisarea.Thesectionsbelowdescribeindetail
potentialrisksassociatedwiththeproject,possiblesolutionstomitigatethem,andgeneral
recommendationsforthefuture.
Risk and solutions Thefinancingmechanismforthelanternsinvolvesmultiplelayersandflows.The
saleoflanternsisatwo‐stepprocess,withthesaletothemicro‐entrepreneursbeingone
step,andtheresaleofthoselanternsbythemicro‐entrepreneurstotheend‐usersbeing
thesecond.Thistwopartprocessimpliestheexistenceoftwodifferentpricepointsand
premiums–oneattheentrepreneurlevelandoneatthefinalend‐userlevel.Therefore,
projectmanagersmayhavelimitedcontroloverthepricethattheend‐userpays.Thereare
twopossiblewaystomitigatethis.Attheentrepreneurlevel,SELFcancontractan
agreementwithMicamathatsetsanupperboundmarginforthesalepriceofthelanterns,
ensuringanypremiumsthatMicamachargesarereasonable.Attheend‐userlevel,SELF
cansetupareportingsystemandfeedbackchannelbetweenthelast‐mileentrepreneurs
andMicamatoregulatefinalretailpricesbeingchargedtoend‐users.
SELFisafairlylargenon‐profitwithadiverseportfolioofenergyaccessprojects
acrossvariouscountriesincludingBenin,Colombia,Haiti,andmore.Theircorestrengthis
notinthesolarlanternspace–thisisnewterritoryforthem.Theirlackofexperiencewith
solarlanternsandtheextentoftheirothercommitmentsposeariskofnotenough
involvementfromSELF’sendtomaintainkeyrelationshipswithon‐the‐groundpartners.
TheMastersTeamproposesthatSELFfocusonprioritizingregularcommunicationand
strongrelationshipswithMicamaandFonkoze,becauseconstructingadistribution
networkfromscratchwillbemuchmoretimeconsumingthanworkingwithcurrent
partners.SELFalsodoesnotnecessarilyhaveaclearvisionforwhatwillhappentothe
lanternprojectaftertheinitialstages.Apossiblesolutiontothismaybetoworkwith
MicamaandFonkozetoensurethemaintenanceoflanterninventoriesandrevolvingloan
funds.Thedetailsofthepost‐grantlanternprogrammustbechartedoutclearlytobenefit
allpartiesinvolved,especiallytheentrepreneurs,thelast‐milecustomers,andtheir
families.
Thefinalriskthatweseewiththeprojectisthedistinctlackofanend‐user
financingprogram.Intheliterature,end‐userfinancinghasbeenidentifiedasanessential
65
piecetosolvingtheenergyaccesschallengefortheBOP.SELFanditson‐the‐ground
partnersmustworktogethertoleverageexistingexpertiseandexperiencestoforgean
end‐userfinancingschemeoncethepilotmodelhasbeenprovenassuccessful.
Recommendations AccordingtoMicama,thebasiclanternmodelswillbesoldtolocalentrepreneurs
foraroundUS$15withagrossmarginof32%.Thispricesettingwillresultintheend‐
userspayinganestimated$17to$18forthemostbasiclantern.Formostfamiliesinthe
CentralPlateau,thisisasignificantsumtopayforalanternallatonce.SELF’spartnership
withMicamahasbroughtanMFIintothebusiness,buthasn’tyetconnectedwiththe
Haitiangovernment.TheimporttariffforsolarlanternsinHaitiis22%,whichaddsextra
costtotheultimateretailpriceofthelanterns.ConsideringthefactthisSELF‐Micamasolar
lanterndistributionprogramisnotsolelyaprofit‐aimedbusiness,buttheprimarygoalis
tohelpruralHaitiansobtainbetteraccesstocleanenergy,itwouldbeworththeeffortto
negotiatewiththegovernmenttoloweroreveneliminatethe22%importtarifffor
lanterns.Ifsuchnegotiationssucceed,thelanternpricefortheend‐usersmaybe2‐3USD
less–asignificantamountforBOPconsumers.Thereisprecedentforthistypeof
negotiation:non‐profitsandbusinesshavesucceededincommunicatingtheimportanceof
eliminatingtaxesoncleanenergyproductsinmultipleAfricannations.
Anotherstrategyworthtryingtomakethelanternsmoreaffordableforend‐users
wouldbetosetupanend‐userfinancingprogram.Asoneoftheoptions,mobilelanding
couldgiveend‐usersmoreflexibilitywiththeamountofcredittheypurchaseeachtime,
givingthemtheoptionofpayingforlanternusewhenevertheycanafford.Inthisway,even
thepoorestfamilymaybeabletopurchasesolarlanterns.Creatingadailyrentalplanfor
lanternscouldbeanothersolution.Bysettingalowpricefordailyrental,thepoorest
familiescouldstillrentlanternsforadayortwowhentheyneedthemthemost.
Thewarrantyprogramforsolarlanternslastsonlyfortwoyears,butthelanterns
aredesignedtolastforatleastfivetotenyears.End‐userswillstillneedmaintenanceand
repairservicesaftertheendofthewarrantyperiod.Dependingontheamountofsolar
lanternssoldinthefirsttwoyearsoftheprogram,Micamashouldconsidersettingupa
third‐partyrepairnetworkfortheproductsnolongercoveredbywarranty,andfacilitate
thetrainingofrepairtechniciansbylanternmanufacturers.Standardrepairfeesshould
alsobeestablishedtovoidover‐charging.Thisapproachcouldnotonlysolvetheproblem
oflackingrepairandmaintenanceservices,butalsocreatemorejobopportunitiesand
incomeforlocalpeople.Thed.LightS2,thesolarlanternwithonlybasiclightingfunction,is
expectedtocomprisethemajorityofalllanternssold.Thisisnotacomplicatedmodeland
willberelativelyeasytorepairifitexperiencesamalfunction.Alongwiththetraining
providedforentrepreneursforsolarlanterndistribution,entrepreneurscouldalsoget
trainedofbasicrepairforsolarlanterns.Thisapproachmaybeeasiertoimplementand
66
morefeasiblethanhaveprofessionalmaintenancepersonnelonthegroundiftheamount
oflanternssoldissmaller,buttherepairandmaintenancequalitymaybelimitedtoamore
basiclevel.
Thesolarlanterndistributionprogramhasn’tyetestablishedaconcretemarketing
plan.EventhoughmostFe‐YoBienfamilieswhoparticipatedinourfieldsurveyexpressed
aninterestinowningasolarlantern,theiractualwillingnesstopayforasinglelantern
remainsunclear.Somefamiliesmaybackoutfrompurchasinglanternsiftheyfindthe
pricehigherthantheyexpectedordoubttheeffectivenessofthelanterns.Marketing
strategieswillbeneededtodrivesales.Demonstrationscouldhelppeopleunderstandthe
benefitlanternscanbringmorevisually.ElephantEnergy,anorganizationdistributing
solarlanternsinAfrica,performsdemonstrationsatnighttoconvincepotentialbuyersby
showingthemtheeffectivenessofsolarlanterns.Theyhaveseenanincreasedinterestin
theproductafterthenightdemonstrations.Havinga“trialperiod”or“fullrefunding
period”forlanternsmayalsohelpincreasesalesvolumesforentrepreneurs.Givingthe
lanterntolocalfamiliesfreeforafewdaystotry,orgivethemthechoiceofreturningthe
lanternwithfullrefundwithinthefirstfewdaysofpurchase,asMicamaalreadydoesand
planstodoforthisprojectisagoodstart.Itgivespeopletimetoexperiencethebenefits
theywillreceivefromowningalanternbeforemakingthefinalpurchasingdecision.People
whoremainunconvincedbytheeffectivenessofsolarlanternscanhaveanopportunityto
trythemforthemselvesanddecideifitissomethingthatwillimprovetheirqualityoflife.
Anotherfactorthatmustbetakenintoconsiderationisthetimingformarketingand
advertising.SincemostofthefamiliesintheCentralPlateauearntheirincomefrom
agriculturalactivities,thereisseasonalvariationintheirhouseholdwealth.Theharvest
seasonmaybeabettertimeformarketingandencouraginglanternpurchasesversusother
timesoftheyear.
67
Conclusion AttheconclusionofthisMastersProject,theneedforelectrificationinthe
developingworldisjustaspressingasitwaswhenwebeganourworkeighteenmonths
ago.Lackoflightingforhomesandbusinesses,indoorairpollution,andfinancialhardship
fromkeroseneusearestillmajorproblemsenduredbyroughly20%oftheworld’s
population.
Despitehowentrenchedtheenergyaccessproblemcontinuestobe,forward
progressisbeingmade.Forexample,Panasonicrecentlyannouncedplanstodistribute
100,000lanternstotheregionsoftheworldinthegreatestneedofelectricitybythe
company’shundredthanniversaryin2018(Panasonic,2014).Thistypeofhigh‐publicity
campaignnotonlyimmediatelyimprovesthelivesofindividualslivingwithoutelectricity,
butitdrawsattentiontotheseverityoftheproblem,whichinturnfacilitatestheworkof
organizationsliketheSolarElectricLightFundorMicamaSoley.
Ourprojectseekstoestablishaself‐sustainingsolarlanterndistributionnetworkin
Haiti–theleastdevelopedcountryintheAmericasandoneoftheworld’smost
impoverishedcountries.Ifsuccessful,theprojectwillmake5,000high‐performance
lanternsimmediatelyavailabletosomeofHaiti’spoorestcitizens,theresidentsofthe
CentralPlateau.Movingforward,theincomegeneratedfromthesaleofthelanternswill
supportanetworkofhundredsofmicro‐entrepreneurs,andfundthecontinuationofthe
program.
WorkingwithSELFandMicamaSoley,wehavecompletedanimportantphaseof
thisproject:planningandprojectdesign.Themuchgreatertaskofimplementingthe
project,overcomingtheinevitablehurdles,andmonitoringitsevolutionovertimewillbe
leftontheshouldersoftheon‐the‐groundpartners.Itisthisteam’ssincerehopethatthe
thoughtsandrecommendationsthatwehaveoutlinedinthisdocumentwillcontributeto
thesuccessofthatcolossaltask.
68
Appendix I. Selected Solar Lantern Models Brand/
Manufacturer
BarefootPower
Ltd.
d.Light
FoseraGroup
GreenlightPlanet
PrakruthiPower
MarathonerCLP
(Africa);Toomeen
SolarCo.,Ltd.
(Asia)
Niwa
Nokero
SchneiderElectric
NuruEnergy
SOLUXService
GmbH
SUNLITE
Model
BarefootPowaPack5W(Gen.2.5)
BarefootPowerFireflyMini(Gen.2.5)
BarefootFireflyMobileLamp(Gen.2.5)
BarefootPowaPackJuniorMatrix(Gen.2.5)
d.LightS2
d.LightS20
d.LightS300
FoseraPicoSolarHomeSystem7000
FoseraSCANDLE200
FoseraBOP
SunKingEco
SunKingPro
SunKingSolo
1WattLEDArundhatiSolarLantern
2WattLEDArundhatiSolarLantern
3Watt3StepSolarCeilingLantern
MarathonerBeaconMB2‐090(Africa)/SooLEDB1(Asia)
MarathonerBeaconMB2‐200
MarathonerBeaconMB2‐380(Africa)/SooLEDB3(Asia)
NiwaUno50
NiwaMulti100
NiwaMulti300(Standard)
CrestoneSolarLightBulb(N200)
CrestoneProSolarLightBulb(N210C)
ShavanoSolarLightBulb(N220)
ShavanoProSolarLightBulb(N220C)
SchneiderElectricIn‐Diya2:LEDSolarHomeLightingSystem(2.5W)
SchneiderLEDSolarHomeLightingSystemMainsInput
SchneiderElectricLEDHomeLightingSystem2.5W
SchneiderElectricLEDHomeLightingSystem5W
NuruLight+PV(SolarNuruLightStar)
SolarNuruLightSmart
NURULIGHT(NL1)
SoluxLED‐105
SoluxLED‐50
SoluxLED‐100
SunliteSolarLightG3
Sunlite1
Sunlite2
Sunlite4
Phone
Charging
YES
YES
YES
YES
NO
NO
YES
YES
YES
YES
NO
YES
NO
YES
YES
YES
NO
NO
NO
NO
NO
YES
NO
NO
NO
NO
NO
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
69
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