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Exploring the link between products and services in low-income markets: Evidence from solar home systems

Author

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  • Christian A. Friebe
  • Paschen von Flotow
  • Florian Taübe

Abstract

One of the key challenges of energy access in emerging markets and developing countries is how to reach households and communities that are unlikely to get a grid connection in the long term or those that are connected to the grid but suffer from regular blackouts or low voltage. By surveying entrepreneurs selling Solar Home Systems (SHSs) on a commercial basis in emerging and developing countries, this study is one of the first attempts to quantify the key elements of four potential Product Service Systems (PSSs): Cash, Credit, Leasing and Fee-for-Service. Whereas the Fee-for-Service approach was found to be suitable only under certain conditions, all PSSs share two key elements for successful market deployment: one or more years of maintenance, and customer support in financing these customers' new asset. Moreover, it appears that private sector companies are in principle able to deliver SHSs to households with incomes greater than USD 1000 per year. The implications for policy makers and development aid agencies are, first, to include maintenance services into public programmes or public-private partnerships and, second, to explicitly consider financial risks for entrepreneurs (e.g. customer commitment and repayment conditions). © 2012 Elsevier Ltd.

Suggested Citation

  • Christian A. Friebe & Paschen von Flotow & Florian Taübe, 2013. "Exploring the link between products and services in low-income markets: Evidence from solar home systems," ULB Institutional Repository 2013/206765, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/206765
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    Cited by:

    1. Jairo da Costa Junior & Jan Carel Diehl & Fernando Secomandi, 2019. "Towards Systems-Oriented Energy Solutions: A Multilevel Analysis of a Low-Income Energy Efficiency Program in Brazil," Sustainability, MDPI, vol. 11(20), pages 1-22, October.
    2. Samad, Hussain A. & Khandk, Shahidur R. & Asaduzzaman, M. & Yunus, Mohammad, 2013. "The benefits of solar home systems :an analysis from Bangladesh," Policy Research Working Paper Series 6724, The World Bank.
    3. Juntunen, Jouni K. & Hyysalo, Sampsa, 2015. "Renewable micro-generation of heat and electricity—Review on common and missing socio-technical configurations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 857-870.
    4. Hirmer, Stephanie & Cruickshank, Heather, 2014. "The user-value of rural electrification: An analysis and adoption of existing models and theories," Renewable and Sustainable Energy Reviews, Elsevier, vol. 34(C), pages 145-154.
    5. Overholm, Harald, 2015. "Spreading the rooftop revolution: What policies enable solar-as-a-service?," Energy Policy, Elsevier, vol. 84(C), pages 69-79.
    6. Ogundiran Soumonni & Kalu Ojah, 2022. "Innovative and mission‐oriented financing of renewable energy in Sub‐Saharan Africa: A review and conceptual framework," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(1), January.
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    8. Joshi, Lalita & Choudhary, Deepak & Kumar, Praveen & Venkateswaran, Jayendran & Solanki, Chetan S., 2019. "Does involvement of local community ensure sustained energy access? A critical review of a solar PV technology intervention in rural India," World Development, Elsevier, vol. 122(C), pages 272-281.
    9. Holtorf, Hans & Urmee, Tania & Calais, Martina & Pryor, Trevor, 2015. "A model to evaluate the success of Solar Home Systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 245-255.
    10. Sharma, Rohit & Choudhary, Deepak & Shiradkar, Sayli & Kumar, Praveen & Venkateswaran, Jayendran & Solanki, Chetan Singh & Yadama, Gautam N., 2021. "Who is willing to pay for solar lamps in rural India? A longitudinal study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 140(C).
    11. Sarah Feron & Harald Heinrichs & Raúl R. Cordero, 2016. "Are the Rural Electrification Efforts in the Ecuadorian Amazon Sustainable?," Sustainability, MDPI, vol. 8(5), pages 1-22, May.
    12. Urpelainen, Johannes & Yoon, Semee, 2017. "Can product demonstrations create markets for sustainable energy technology? A randomized controlled trial in rural India," Energy Policy, Elsevier, vol. 109(C), pages 666-675.
    13. Tongsopit, Sopitsuda & Moungchareon, Sunee & Aksornkij, Apinya & Potisat, Tanai, 2016. "Business models and financing options for a rapid scale-up of rooftop solar power systems in Thailand," Energy Policy, Elsevier, vol. 95(C), pages 447-457.
    14. Urpelainen, Johannes, 2016. "Energy poverty and perceptions of solar power in marginalized communities: Survey evidence from Uttar Pradesh, India," Renewable Energy, Elsevier, vol. 85(C), pages 534-539.
    15. Harrington, Elise & Hsu, David, 2024. "Do indicators of safeguards influence off-grid solar choices? Assessing quality, affordability, and service models in Kenya," Energy Policy, Elsevier, vol. 193(C).
    16. Polzin, Friedemann & Migendt, Michael & Täube, Florian A. & von Flotow, Paschen, 2015. "Public policy influence on renewable energy investments—A panel data study across OECD countries," Energy Policy, Elsevier, vol. 80(C), pages 98-111.
    17. Barrie, Jack & Cruickshank, Heather J., 2017. "Shedding light on the last mile: A study on the diffusion of Pay As You Go Solar Home Systems in Central East Africa," Energy Policy, Elsevier, vol. 107(C), pages 425-436.
    18. McGrath, Lucie Klarsfeld & Kayser, Oliver & Dalsace, Frédéric, 2021. "Mindset drives success: Selling beneficial products at the base of the pyramid," Business Horizons, Elsevier, vol. 64(4), pages 475-487.
    19. Bisaga, Iwona & Puźniak-Holford, Nathan & Grealish, Ashley & Baker-Brian, Christopher & Parikh, Priti, 2017. "Scalable off-grid energy services enabled by IoT: A case study of BBOXX SMART Solar," Energy Policy, Elsevier, vol. 109(C), pages 199-207.
    20. Sarah Feron, 2016. "Sustainability of Off-Grid Photovoltaic Systems for Rural Electrification in Developing Countries: A Review," Sustainability, MDPI, vol. 8(12), pages 1-26, December.
    21. Gabriel, Cle-Anne & Kirkwood, Jodyanne, 2016. "Business models for model businesses: Lessons from renewable energy entrepreneurs in developing countries," Energy Policy, Elsevier, vol. 95(C), pages 336-349.
    22. Rahman, Syed M. & Ahmad, Mokbul M., 2013. "Solar Home System (SHS) in rural Bangladesh: Ornamentation or fact of development?," Energy Policy, Elsevier, vol. 63(C), pages 348-354.
    23. Andrea A. Eras-Almeida & Tatiana Vásquez-Hernández & Merlyn Johanna Hurtado-Moncada & Miguel A. Egido-Aguilera, 2023. "A Comprehensive Evaluation of Off-Grid Photovoltaic Experiences in Non-Interconnected Zones of Colombia: Integrating a Sustainable Perspective," Energies, MDPI, vol. 16(5), pages 1-27, February.
    24. Thomas, P.J.M. & Sandwell, P. & Williamson, S.J. & Harper, P.W., 2021. "A PESTLE analysis of solar home systems in refugee camps in Rwanda," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    25. Wang, H. & Zhou, P. & Wang, Qunwei, 2016. "Constructing slacks-based composite indicator of sustainable energy development for China: A meta-frontier nonparametric approach," Energy, Elsevier, vol. 101(C), pages 218-228.

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