business model canvas€¦ · osterwalder’s business model canvas this is a visual tool for...

Business Model Canvas

- Vivek Jha

- I H Rehman

Structure of the module 1. Conceptual framework for the ‘energy

delivery model’

2. Three-phase approach to designing an

energy delivery model

3. Guidelines for implementing a business

model

Defining modern energy access

A household having reliable and affordable access to clean cooking

facilities, a first connection to electricity and then an increasing level

of electricity consumption over time to reach the regional average - IEA (WEO 2011)

Demystify… 1. Rural areas [250 KWh (per hh per annum); 5h per day]

1. Floor fan + A mobile device + 2 CFL light bulbs

2. LPG/Biogas/ICS

2. Urban areas [500 KWh (per hh per annum); 5h per day]

1. Floor fan + 2 mobile devices + 2 CFL light bulbs + efficient

refrigerator + small TV/computer

2. LPG/Biogas/ICS

3. By 2030 – 800 KWh for all new connections

IEA: Energy for all: Financing access for the poor. Special Early Excerpt of the World Energy Outlook 2011. Paris: International Energy Agency; 2011.

Current levels of investment

USD 9.1 billion in 2009

Bilateral Official Development

Assistance, 14%

Multilateral organizations, 34%

Developing country

governments, 30%

Private sector finance, 22%


However…

In order to

1. Cover 1.3 billion people without electricity

2. Cover 2.6 billion people without access to modern cooking energy services


Average annual investment

USD 48 billion per year till 2030



USD 19.6 billion per year till 2030



USD 19.6 billion per year till 2030

•Electricity: On-grid, isolated off-grid, mini-grid

•Cooking: Liquefied petroleum gas (LPG), biogas, advanced cook stoves (biomass & electricity)

Technology solutions

•Grants

•Equity

• Loans

• Insurance

• Subsidies

•Guarantees

Financing instruments •Multilateral organizations

•Bilateral Official Development Assistance (ODA)

•Developing country governments

•Private sector

Financing sources


Sources of financing…


http://asmarterplanet.com/blog/2012/02/energy-aid-parliamentary-launch-during-un-year-of-sustainable-energy-for-all.html

http://asmarterplanet.com/blog/2012/02/energy-aid-parliamentary-launch-during-un-year-of-sustainable-energy-for-all.html

Case Exercise!!

In 1958…

Chester Carlson was an American physicist, inventor, and patent attorney born in Seattle, Washington

Lies high and to the

right!!

End user

Define a energy delivery

model…

Energy delivery model for the poor

For whom?

What?

How?

Challenge conventional way of

doing things

Guy Kawasaki, Art of the Start.

Map of the pro-poor energy

delivery system

Bellenca, R., & Garside, B. (2013). An approach to designing energy delivery models that work for people living in poverty . CAFOD and IIED. CAFOD and IIED

Four key building blocks

1. The delivery model – the set of activities and group

of actors that are necessary to deliver the service(s)

2. The enabling environment – the external

environment that influences and enables the delivery

model

3. The socio-cultural context – the wider socio-

cultural context in which the activities and the actors

who carry them out are embedded

4. Supporting services – any external support that the

delivery model might need due to weaknesses in the

enabling environment or a need to adapt to specific

circumstances of the social-cultural context

Principles of a well-designed

pro-poor energy delivery model

1. Explicitly designed to have a positive human development impact, creating health, education and livelihood benefits.

2. Economically sustainable over its entire life cycle (so including,

where required, financial support in the form of subsidies, start-up

grants and livelihoods support. These should be factored in

explicitly from the outset).

3. Technologically appropriate to the context (i.e. it can be locally

managed and maintained) and capable of meeting the energy

needs and wants of end users.

4. Environmentally sustainable and socially inclusive. This requires robust assessment and on-going monitoring of its potential and

actual environmental and social impacts (both local and

national).

5. Emerges from negotiations among multiple stakeholders, including end users, which results in a common definition of

objectives and agreement on an implementation framework.

Ideally…

Not a ‘one-off’ intervention but

adaptable to different contexts and

replicable or scalable to reach

greater numbers of people living in

energy poverty.

Three phases of designing an

energy delivery model

1. Phase 1: Identifying demand

2. Phase 2: Market and context analysis

3. Phase 3: Designing the delivery model

Phase I: Identifying demand

1. Identify the context for intervention

1. A geographical area 2. A target group

3. A specific objective 2. Carry out an energy needs and wants assessment

3. Nail down the energy gaps 4. Identify potential solutions and define objectives

Identifying demand

Objectives

Stakeholders and end

users

Ideas

Phase II: Market and context

analysis

1. Participatory planning and analysis using tools What does the market chain look like?

Who would the main actors be?...

Is the business proposition economically sustainable?

What other developmental benefits will it provide? Etc.

2. Field research and definition of a base line

Market & Context analysis

Field research

Baseline

Phase III: Designing the

delivery model

1. Mapping and refining solutions 2. Identify supporting services

3. Implementing planning and M&E

1. Pilot stage

2. Testing and M&E

3. Roll out of the product(s)/services

4. Maintenance

Designing the

delivery model

Implementation plan

M&E

All the phases together

Intervention

Osterwalder’s Business Model

Canvas

This is a visual tool for developing

service or product delivery models.

It helps companies make strategic management decisions about their

business activities by mapping

potential trade-offs. The categories

in the model can be grouped as follows:

1. The value proposition: the business idea itself

2. Infrastructure: the set of activities, resources and network of partners

required to operate the value proposition

3. Customers: these are grouped in different segments, approached in

various ways (relationships) and reached through the channels that

allow the company to promote and deliver its products and to provide

after-sale support, and allow the customer to evaluate and purchase

them

4. Finance: this is divided into all the costs to be balanced by the streams

of revenue

Business model generator


Business model generator

Key Stakeholders

End-user Segments

End-user Relationships


Customer segments

Defines the different groups of people or organizations an enterprise

aims to reach and serve

End-user segment

Lighting a billion lives (LaBL)

500000+

Lives Touched

100000+

Households Illuminated

2308

Villages Lit Up

22

States Covered

Customer segments

End-user segment


Value proposition

Describes the bundle of products and services that create value for a

specific customer segment

Value proposition

Grameen Bank

Start with the problem rather than the solution!!

Value proposition


Channels

Describes how a company communicates with and reaches its

customer segments to deliver a value proposition

Channels

M-Pesa is a mobile based money transfer

and microfinancing service for safaricom

and vodacom, the largest mobile network

operators in Kenya and Tanzania. Currently the most developed mobile

payment system in the world

M-Pesa allows users with a national id card

or passport to deposit, withdraw, and

transfer money easily with a mobile device

Channels


Customer relationships

Describes the types of relationships a company establishes with

specific customer segments


End-user relationships

Revenue streams

Represent the cash a company generates from each customer

segment

Costs must be subtracted from revenues to create earnings

Revenue streams

Sun Edison LLC owns and operates power

plants in North America and provides solar

generated energy to commercial,

government and utility customers The company provides solar energy

services, which include renewable power,

monitoring, marketing, renewable portfolio

standards, and solar tariff services.

Sun Edison LLC was founded by Jigar Shah

in 2003

Sun Edison has over 52 MW of hands-on

installation experience and over 31 MW

under management

Revenue streams


Key activities

Describes the most important thing a company must do to make its

business model work

Key activities

WEAVE A MAT – milestones,

assumptions and tasks

Milestone “Finish design”

Assumptions “number of demonstrations per day”

Tasks “Rent a project monitoring unit”

Key activities


Key partners

Describes the network of suppliers and partners that make the

business model work

Key partners

It all began when

milk became a

symbol of protest

Founded in 1946 to

stop the exploitation

by middlemen

Inspired by the

freedom movement

Key partners

Key stakeholders


Cost structure

Describes all costs incurred to operate a business model

//localhost/Users/vivekjha/Desktop/cash flow_SCS_MG_SHLS.xls

Cost structure

Financial cost structure


In addition…


Delivery model

CASE ILLUSRATION:

Scaling up clean cook stoves…

DfID TERI cook stove programme in India

Scaling up the use of clean cooking

technologies for poor households

Target group – 100,000 underserved households

in India

Transition

Context…

Deprived of LPG/ electricity based

cooking

50% of world population

Depend on mud stove

Low (10%) thermal efficiency

4 million premature deaths from

Household Air Pollution annually

Inefficient household energy use has adverse

consequences for the environment, air quality

and human health

Additionally…

Solid fuel burning contributes to 25% of

global anthropogenic Black Carbon -BC emissions

BC is defined as the solid form of mostly

pure carbon that absorbs visible sunlight

Product of incomplete combustion of carbon-based fuels

CO2

CH4

O3

BC

BC has recently emerged in climate change

debate Second largest global warming agent

Short Lived (~2 weeks)

Low hanging fruit: available technologies, local impact

Buy time for CO2 negotiations

WE have been focusing on research related to rural energy for past three decades,

of which energy services related to cooking form an important part

Proj ect Sur ya

I NST EP – Proj ect wi t h DST

Focused on quant if ying har mf ul emissions f rom improved co ok stves

Focused on research, custom iz at ion and d evel opm ent of improved co ok ing

d evices

The larger chunk…

Black Carbon?

Micro-Aethalometer

50 mLPM

Focus: Improved biomass cook

stoves…

IEA Projection:

Dependence on

biomass as cooking fuel

in 2030

Value Proposition to

users Saves fuel

Reduce smoke in kitchen

Decrease cooking time

Technology Types

Forced Draft: “Gasifier”

stoves with two-stage

combustion aided by

fan

Natural Draft: Improved

one stage burning-

“rocket elbow”

combustion chamber

Technology Types

Improved stoves are

not equal

Forced Draft >

Natural Draft

Scaling up ??

Addressing barriers!!

Effective delivery & service provision

Addressing technical barriers

Addressing non-economic barriers

Financial support

ü TP Networks ü Value chain creation

– distributor & EE

ü Incentives ü Credit – network with

RRB/MFI

ü Customization ü Technical inputs to

manufactures

ü Information Education and Communication

(IEC)

I.

II.

III.

IV.

1. 2. Value proposition Customer segment 3. Channels

5. Key activities 4. Customer relationship

6. 7. Key partners Financial Flows

Local Grass root organizations

Community based organizations

SHG Federations

Energy Enterprise

a.

b.

v Establishment of EE & Distributor network v Setting up benchmarks for manufacturing v Developing a network of TP

v Networking with Financial Institutions – Commercial bank/ RRB/ MFI

v Developing and implementing a framework of

incentives

v Customization of technology v Technical support to manufacturers v Policy advocacy

v Awareness generation within end users, manufacturers and policy makers

v Policy advocacy

v Networking with knowledge institutions for research & development

Thank you!!

- [email protected]

business model canvas€¦ · osterwalder’s business model canvas this is a visual tool for...

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