7. Why Focus on Electricity? Electricity is a root cause of poverty in Brazil. The use of electricity in rural areas can enhance: Education Safety Health Economic Wellbeing $ CAN FREE LARGE AMOUNTS OF TIME & HUMAN LABOR
19. Financial Projections The Sun Shines for All (TSSFA) estimates it will break-even at the end of 2009 with over 6,000 customers GOAL FOR FUTURE YEARS: Reach over 100,000 rural customers 2006 2007 2008 2009 Total Number of Kits Leased 1,000 1,500 1,740 1,880 Accumulated Number of Kits 1,000 2,500 4,360 6,100
20.
21.
22. Fabio Rosa, STA, IDEAAS, TSSFA, & Quiron The Social Enterprise Spectrum Mostly Philanthropic Hybrids Mostly Commercial “ Alleviating Poverty & Malnutrition: Successful Models” Financing and development aid , Nutrition and Food Fortification , Food Production & Distribution General Methods: Appeal to goodwill Non-pecuniary rewards Mission driven Mixed motives Some subsidy Impersonal exchange Arms-length bargaining Market driven Key Stakeholder Relationships Primary beneficiaries: Unclear or needy Not required to pay Subsidized pricing Price discrimination Third-party payers Customer able to pay Priced for profit Capital sources: Philanthropic Donations/grants Mixed debt & donations or subsidized investments Capital market rate Equity and debt Work force: Volunteers with high Commitment to social mission Mixture of volunteers, professionals, paid staff or below-market wages Paid employees, focus on financial rewards Suppliers: In-kind donations Discounts, or mixture of in-kind and full price Charge market prices Governance Mission-constrained Self-perpetuating Board stewardship Mixtures of representation and self-selection Balancing constituencies Board elected by owners Property rights Fiduciary responsibilities
23. For Profit & Non-Profit Social Alliance: Incorporating the Strengths of Both For-profit: STA & TSSFA NGO: IDEAAS & Quiron Strength $; Breakeven in 4 years; Alliances/understanding of local community and politics Poor as employees–sustainability; Empowering Weakness Size; Lack of experience compared to utility companies in the area $; Currently a start-up (challenges of a young business) Opportunity New technology can further reduce costs; Culture of constant innovation Can improve income and living conditions; Opportunity to reach the most poor; Social and environmental impacts Threat Powerful utility co’s may extend grid into target area; Default risk; Political obstacles Reliance on livestock/ agriculture – risk of natural disaster or disease; Micro-lending (credit risk)
ASHLEY Although Brazil is an important industrial power with the strongest economy in the Latin American region, poverty is still widespread in the country. According to some estimates, 50 per cent of the population is poor (or living on slightly less than US$2 per person per day). Brazil is second only to South Africa in the world ranking of income inequality. Brazil is ranked as one of the countries with highest GNI coefficient index of inequality assessment. That means that a great part of the population is living below the poverty line based on labor income. This percentage has dropped from 33% considering the previous three years to a 19.31% in the past year. However the statistics are still high if compared to a first world country.
ASHLEY AND DAVID Luxurious apartment next to a slum Clean water is another problem, since a lot of the favelas do not have access to it. This is particularly true to the new ones built on the outskirts of the city, where it is even more unlikely that the government will engage on sanitation programs. People are sometimes forced to get water from rivers, which is not always reliable or safe. Also, the lack of good sewage creates streams of excrements on the streets of many favelas, which rise with the water whenever it rains.
ASHLEY WHO: Founded both a for-profit corporation, Agroelectric System of Appropriate Technology (STA) and a not-for-profit organization, the Institute for Development of Natural Energy and Sustainability (IDEAAS). STA is home of a rural distributed energy initiative dubbed the Sun Shines for All. It also performs the manufacturing and assembly of some of the components used by The Sun Shines for All. This includes fluorescent lighting fixtures that are less expensive than those currently on the market. IDEAAS focuses on the use of high-efficiency and low-cost technologies in the fields of renewable energy and agricultural science to meet the needs of low-income markets. WHAT: In an effort to help small rural farmers increase their income, Rosa identified a new, more affordable way of distributing electricity. Working as a consultant to government organizations, Rosa helped bring affordable electricity to 42 municipalities while reducing the cost of electricity by up to 90%. WHY: The utility companies had little experience working with working with low-income rural markets, and saw no incentives to provide electricity to rural off-grid communities. They preferred to serve the existing on-grid cities, which they saw as more profitable than pursuing low-cost rural electrification. are interested in is having access to the conveniences that electricity provides, such as effective and safe lighting at night and the ability to listen to the radio or heat shower water.
LUCAS HOW: The new utility owners didn't care about low-cost rural electrification because serving cities was much more lucrative. I learned that one billion of them could afford solar energy today at commercial rates - provided that they could rent it or pay it off in instalments. Both STA and IDEAAS have been working to bring electricity and community development to rural Brazil since the mid 1980s. WHEN: However, the 1990s marked a period of extensive deregulation in the country. As a result of this trend, in the late 1990s Brazil’s electric utilities were privatized.
MINDY Electricity is a root cause . The use of electricity in rural areas can: Comforts of life Electric fencing for cattle Water pump for crops Enhance education by allowing studying beyond daylight, introducing better learning conditions: computer facilities, internet & distance learning (lack of teachers) Reduce isolation and marginalization by the improvement of communication and information channels such us telephony, TV, cinema, radio and computers Allow for the implementation of safety measures: street lighting, security lighting, remote alarm systems, electric fences, road signs, railway crossing & signals, etc. Improve healthcare conditions by providing drinking water and lighting for rural clinics where vaccines could be conserved, operations could be carried out, diseases could be prevented by x rays and pregnancies could be monitored Prevent natural disasters by giving the possibility of installing radio repeaters and receivers, remote weather measuring, data acquisition and transmission, earthquake monitoring systems, emergency power for disaster relief, etc. Foster productivity , since electricity also allows for irrigation, crop processing, food preservation, water pumping, fencing, etc. The generation of income and welfare would enhance economic growth and provide the means to afford the electricity
MINDY
LUCAS
LUCAS
IAN Define TSSFA Bottom of pyramid market Spent 8 months surveying 77 families in rural areas of Brazil w/ high poverty levels Found that almost 70% of families surveyed spent more than $11/month on electricity Relied on kerosene, candles, batteries, etc. TSSFA also allowed for use of renewable energy source Found early on that rural poor are not interested in buying solar panels; what they do care about is gaining access to cheap, reliable energy in order to listen to the radio or heat water for a shower 3-year contract that can be cancelled at any time, as long as the cancellation fee is paid Electric
IAN Substitute steel/zinc cables/connections for copper Substitute wood poles for cement poles Performed by local electrician Takes 2-3 hours, but mostly travel time Use just one wire Use lower cost materials
IAN
IAN
IAN
IAN US- based SDF has provided TSSFA w/ an intial $60,000 in financing, w/ a promise of an additional $50,000 Project Quiron Rosa realized that he could quickly capture the market of the 70% of people who spent more than $11/month on electricity, but he did not want to ignore the 30% who didn’t (enter Project Quiron) Rather than subsidizing the cost of solar electricity for this bottom of the bottom of the pyramid market, he is trying to help this demographic raise their income to a level where they can afford TSSFA Clever- uses solar panels to install electric fences to help grazing management In past projects, this has increased animal production from 100-200% Forest management techniques
IAN US- based SDF has provided TSSFA w/ an intial $60,000 in financing, w/ a promise of an additional $50,000 Project Quiron Rosa realized that he could quickly capture the market of the 70% of people who spent more than $11/month on electricity, but he did not want to ignore the 30% who didn’t (enter Project Quiron) Rather than subsidizing the cost of solar electricity for this bottom of the bottom of the pyramid market, he is trying to help this demographic raise their income to a level where they can afford TSSFA Clever- uses solar panels to install electric fences to help grazing management In past projects, this has increased animal production from 100-200% Forest management techniques
DAVID
DAVID
DAVID
DAVID This adds up to a reduction in carbon emissions and therefore a reduced impact on global warming Disposal issues mitigated by the fact that items are leased, not purchased, thus keeping responsibility for appropriate disposal within the firm, which is more capable of managing proper disposal than individual customers
MINDY
MINDY
MINDY Not simply a one size fits all strategy - different business models to target different segments Social alliances – incorporating benefits of nonprofits and for profits Culture of innovative thinking & creativity Passion and drive of Fabio Rosa Research, effective alliances, strong understanding of demographics and communities Prevents thefts – Catholic saint in battery packs Ease – uninstllation free if utility companies expand Perseverance, patience, quality, attention to detail
![Today we will discuss: ,[object Object],[object Object],[object Object],[object Object]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)