JOIN USA report by the Centre for Development Finance (CDF) at the Institute for Financial Management and Research (IFMR) has arrived at these conclusions. The report has been prepared after studying renewable energy companies across the country and assessing their performance in selling products like solar lanterns, cookstoves and solar home systems.
The study was based on the services offered to the Base of Pyramid (BoP), or the sector that spends less that Rs 3,453 worth goods and services per month. This constitutes 76 per cent of the rural population and 60 per cent of the total Indian population.
Sreyamsa Bairiganjan, one of the authors of the report said Karnataka had one of the most friendly renewable energy policies, encouraging a large number of companies to set up their base in the State. Except a few, most have failed to invest their money in adequate distribution and marketing channels. This has resulted in less than expected revenue for the companies and most importantly, failed to capture large markets which were open to products based on renewable energy.
“We found that the end-user pitch was not working. For example, if a solar lantern cost Rs 1,500, it is difficult to convince someone in the village that their money would be realised over the next few years. But the villagers want instant results. In many cases, the after sales service was so poor that if a company did not provide any service for its solar lanterns, then the product would be banned by the villagers,” Sreyamsa said.
The problem is not just with after sales service. Even product designs face rejections. Unidirectional lanterns, for instance, are disliked by villagers since it limits the use only to one person. In other cases, the focus is on making the product more robust. “Companies should have a service that will ensure that their products work for three to five years,” says Sreyamsa.
Renewable energy companies spend a lot of money on newer technologies. Since most of this sum is in the form of grants, this amount would get over in five years’ time. And this is the time, Sreyamsa says, should be spent on strengthening markets and distribution networks. However, companies end up spending on technology and not having a market to speak of after the grant dries up, which could provide them with sustainable revenue.
He says that compared to most other states, grid electricity is well established in Karnataka. Rural people here are already familiar with renewable energy products.
Despite this, companies chose only to manufacture and outsource the selling and distribution to others rather than establish their own network as it incurs more cost.
Sreyamsa feels that most companies are busy pitching themselves as clean energy companies, but as far as households are concerned, it is benefit that really matters.