Renewables Profits at the Base of the Pyramid

Poverty and profit tend not to mix. Yet, the alleviation of the former is creating a tremendous opportunity for the latter. Close to one billion people have risen above the poverty line over the past twenty years, entering the global consumer marketplace. The trend is anticipated to continue – potentially liberating the remaining one billion people from poverty over the next two decades. For investors, the implication is the emergence of the largest new market for global goods and services. An estimated three billion people now earn between $2 and $10 a day. Selling basic services to this market through micropayment schemes may enable technology access, development gains, environmental benefits, and profit opportunities that were unimaginable prior to mobile banking. Pay-as-you-go (PAYG) solar may become the largest opportunity in energy services, and business models positioned at the confluence of declining component costs, rising mobile money usage, and low cost financing are poised for explosive growth over the coming years. Efficient product distribution and  working capital financing are the primary impediments to scale. Neither raw demand nor market size is a concern. Rural villagers can save money today and dramatically improve their quality of life as customers of PAYG solar. There are multiple companies successfully selling low cost solar power systems and services to homes and small shops across the developing world through multiple business models. These business models and their execution will determine the spoils of this enormous market opportunity.

Speaker: Ted Hesser, Saviva Research