Basic HTML Version
CenSES annual report 2013
21
The decentralized renewable energy mar-
ket in India: Case study
This research examines the dynamics of business
model development in a nascent market context. We
focus on the rural renewable energy market in India.
About two-thirds of the 1.3 billion people that lack
access to electricity in the world live in sub-Saharan
Africa and India. To meet the UN defined goal of uni-
versal access to electricity by 2030, the private sector
has to play an important role alongside the public
sector and donor agencies. In India, the Electricity Act
of 2003, allowed the participation of private sector
players in the generation and distribution of electricity
in rural areas and emphasized the role of renewable
energy technologies. This opened up a new market for
off-grid renewable energy based electricity supply.
However, this market is characterized by high levels
of uncertainty and commercialization of renewable
energy technology in this setting is challenging. It is
difficult to predict user behavior and willingness to
pay and to match technology to this unpredictable
demand. In addition, there are few precedents to fol-
low and the institutional context is underdeveloped.
How should an entrepreneur develop a robust busi-
ness model in this setting? Theory suggests that
business models develop though a process of experi-
mentation, where a robust business model emerges
through a process of testing and refining a hypoth-
esized business model in a real life setting. When the
market itself is new or developing, entrepreneurial
action influences market development and in fact
entrepreneurs may strategically try and influence this
development in order to achieve dominance with
their business model.
An important external source for knowledge during
the development of new innovations is universities
and other public research institutions. These research
institutions possess technological expertise and
knowledge that can be valuable input to the firms’
innovation processes, but can also be a partner that
facilitates organizational learning and the creation of
new knowledge. However, many firms find it difficult
to collaborate with research institutions.
These issues will be explored in detail in RA4. Further,
public policy and regulations may also influence
both access to and use of resources and will be given
particular emphasis in the analyses of firm and project
level strategies and decisions.
Furthermore, the large scale investments needed to
develop, innovate and implement new alternative
energy technologies require fairly large coalitions of
actors meeting a politically moderated demand. This
suggests a need to focus on infrastructural innovation,
even if existing literature in this field is limited to stud-
ies of relatively small-scale experiments.
Public engagement is critical to the outcome of inno-
vation and commercialization. Recent research asks
what is needed to achieve robust and mature public
evaluations: early involvement, transparency, ade-
quate information, opportunities for deliberation, and
acknowledgement of contributions from a diversity of
expertise.
RA 4 is also responsible for CenSES Innovation Forum,
an event which is run in conjunction with Technoport
(www.technoport.no).
Sinha and Ausrød trace
the development of the
business model of Husk
Power Systems that has
managed to set up 79
power plants in 5 years
supplying power to
over 250 villages. It has
been ranked at the top
of all businesses in the
mini-utility sector by the
International Finance
Corporation (2012).
We find that the company deployed three distinct
business models sequentially over the span of 5
years. Each of the business models serves as a tool for
learning, while also paving the path for the next busi-
ness model. The business model configuration that
enables maximum learning about market conditions
is launched first. Each business model configuration
also serves a function of shaping market conditions to
enable the launch of the subsequent business model.
The final ‘growth oriented’ business model is launched
last. We thus find that entrepreneurs can use their
business model/s itself as a tool for driving markets.