Blockchain could be a game changer in the energy sector, particularly in renewable energy. The technology has the potential to fulfil the policy and regulatory, technological and economic requirements of a decentralised, decarbonised and digitalised renewables-based energy system. For instance, the current practice of buying and selling renewable energy certificates (RECs) is very complicated with a major risk of errors. Blockchain could track renewable energy at source, providing an alternative to RECs. Global and Indian energy experts highlight the possible use cases of blockchain in the renewable energy space and the likely challenges…

Upendra Bhatt, Co-founder and Managing Director, cKinetics

Blockchain-based initiatives have emerged in a big way in recent years, with cryptocurrency bitcoin as the leading symbol. The core elements of blockchain are:

Peer-to-peer distributed ledger transactions with high level of cybersecurity and comprehensive traceability
Storage and transfer of value
Avoidance of intermediaries enabling low transaction costs
These features are particularly relevant in the ongoing energy transition. The need for energy security and decarbonisation has led to the increased deployment of renewables and emergence of myriad storage applications. With the proliferation of distributed renewable energy systems, which have emerged as “prosumers”, the interaction between generation systems and distribution protocols is undergoing a dramatic shift.

Given the variable and distributed nature of renewables, this transition is viewed as complex and disruptive. The perceived challenges in renewable energy development pertain to reliability, system-level balance and energy market functioning. The challenges are more pronounced in the case of distributed installation such as rooftop PV.

Thus, the sector is ripe for breakthrough innovations, which will help drive this new-age distributed and autonomous energy value chain to its true potential. Blockchain characteristics, particularly cybersecurity, low-cost transactions, and automation, help integrate the distributed renewables with the conventional centralised grid in a flexible and scalable manner.

Blockchain can provide a robust link between energy generation and consumption sources directing their behaviour (including curtailment) based on energy price signals and the state of the grid. The storage and transfer value functions in particular can be quite useful in empowering smart contracts for supporting peer-to-peer trading as well as more sophisticated exchange based mechanisms (such as the REC market).

Over $250 million has been invested in energy sector-focused blockchain initiatives globally. A range of use cases are being piloted across utility operations, peer-to-peer set-ups and market mechanisms. Some of these are IBM’s blockchain platform for European transmission system operator TenneT to balance supply and demand on the high-voltage grid, Omega Grid’s pilot with a Burlington utility for real-time supply and demand management across distributed systems, and platforms such as Energy Bazaar and Sun Exchange as well as energy access oriented smaller firms like SOLShare for peer-to-peer trading.

The growing momentum in the space has also led to the creation of the Energy Web Foundation (EWF), an alliance anchored by the Rocky Mountain Institute for developing energy sector focused standards for blockchain. EWF is being supported by conventional energy giants such as TEPCO and Shell alongside several energy blockchain start-ups.

In the Indian context, blockchain can play a transformative role in scaling up distributed energy systems such as PV rooftop (or even solar heating systems), community mini-grids, storage solutions (particularly those complementing large-scale renewable energy integration into the grid) and electric vehicle (EV) charging infrastructure.

In particular, rooftop solar installations driven by net metering policies and using time-of-day pricing provide an opportunity for blockchain-based technologies. These technologies ensure requisite checks, streamlined monitoring, reporting and verification for clearing “smart contracts” in near real time. However, this is easier said than done. New regulations and policy frameworks and innovative business models are required to leverage this opportunity. Blockchain-empowered systems need to develop the ability to handle the speed and quantum of energy transactions. Further, the incumbent utilities need to step up and reform their proprietary interconnection protocols, facilitating a completely digitalised grid and paving the way for future energy markets.

Maxson Lewis, Managing Director, Magenta Power

There is an urgent need for an efficient data management platform in the Indian energy sector since its generation, transmission and distribution segments function in isolation. With isolation, a lot of inefficiency creeps into the system and a small amount of data is collected for data analytics. I like to call it the “unintelligent grid”.

With the advent of renewable energy, democratisation of power is taking place across the generation, transmission and distribution segments. Democratisation requires a platform for accurate data collection. In this scenario, the use of blockchain will help in establishing an open marketplace for the purchase and sale of renewable energy.

Under the infomatics arm of Magenta Power, we are building a technology layer for community-based microgrid projects near Mumbai. In these microgrid projects, blockchain-type solutions are needed. We have already developed a module that tracks how much energy has been generated and consumed and soon this module will help in the buying and selling of power. We have been conducting proof-of-concept tests and will be launching the platform in three months.

The existing open access regulations only allow power generated from more than 1 MW of solar projects to be connected to the grid. As soon as this regulation is dropped, blockchain will become an incredible open access concept in the industry.

Logically, in the future microgrid ecosystem, EV charging stations will become one of the largest consumers of electricity. They will be on the consumer side of the blockchain platform. As an operator of charging stations, I will be able to buy power at the best rate using this platform. This may be a little far-fetched, but if I have a solar system installed at home, I can sell the excess power to the grid and charge the electric car at a charging station elsewhere. This nexus can be backed by a blockchain platform. But for this to become successful, several things should come together – regulations, infomatics platform and energy storage. We are focusing on the latter two. We already have an infomatics business arm and will be working on energy storage with a partner. As far as regulations are concerned, it will take some time for India to move from a centralised power market to a decentralised one. The shift is inevitable, if not imminent.

Tom Lindberg, Managing Director, ECOHZ

On a global basis, it is estimated that almost a billion energy attribute certificates (EACs) are purchased and paid for annually to enable consumers to document their renewable choice. Volume wise, the key markets are growing at a 15-20 per cent rate annually, increasing the cash flow for renewable producers.

These EACs are information rich, transparent and secure. Through these, energy data is made available at the meter level. They prevent double issuing, double selling and double counting. Moreover, EACs are accepted as the standards for documenting renewable claims for CO2 accounting among leading independent stakeholders like CDP and Greenhouse Gas Protocol.

Despite these positive developments, some players may perceive the existing market to be more complicated and less transparent.

Blockchain enthusiasts need to rethink the goal of their technology. The technology should move in a direction that causes less disruption in the existing systems, and brings improvements in them. It is critical that blockchain advocates include policymakers and regulators in their thinking.

The EAC systems are not technology dependent, but rather technology agnostic. The industry should seek to utilise the best available technology to provide the best possible service. This means that blockchain should not necessarily seek to replace the current EAC systems but add value to the market by providing a better and improved underlying technology infrastructure.

If blockchain can justify its claims of providing a cheaper and more efficient infrastructure, which is more transparent and secure, then it should be embraced by the industry.

But if blockchain is positioned as an alternative policy tool to the current EAC systems, it will jeopardise years of hard work, creating confusion among customers, weakening their credibility among stakeholders, and increasing the risk of double counting. This must be avoided at all costs.

Roelof Reineman, Consultant, Emerging Technologies

The concept of using blockchain in the energy industry came up in early 2015. The first known examples of peer-to-peer trade are the LO3 case in Brooklyn, New York, and part of this took place during the time of New Frontier (the Ethereum release). It encouraged a lot of people to consider applying for peer-to-peer trading in areas other than the financial sector. It was also during this time that I got involved with blockchain and started to experiment with it. Our initial demonstration was using New Frontier and we had covered all the different use cases. Following our demonstration, I started our blockchain lab in Rotterdam, the Netherlands, and from there things took off.

The benefits of using blockchain in the energy sector are the same as those for any other industry, provided that there is a solid blockchain use case and not a project that is done as part of “innovation window dressing”. The benefits can be:

Creation of a single source of truth for all parties involved.
Instead of having to settle later, you verify the data upfront.
Reduction in administrative costs of up to 50 per cent.
Achieving a huge redundancy; Bitcoin’s 99.9835 per cent uptime shows how robust a decentralised system can be.
The challenges of using a blockchain system in the energy sector are:

Be ready to embrace your competition and share more data with them than you are accustomed to
Working out the governance structure and the rules of interaction
Privacy, especially with regard to the General Data Protection Regulation, which will make you seriously consider what data can be put on a blockchain platform safely without being a liability years later.

There are a number of aspects to consider while developing a blockchain platform for the energy sector:

Energy use: When your platform consumes more power than it handles, there is a fundamental problem. That is why for energy applications, a proof-of-work like in Bitcoin will not succeed.
Privacy and data security: One has to carefully consider what data and types of data they wish to store on blockchain. One of the properties of blockchain is its immutability. Everybody can see what is stored on a public blockchain platform, leading to privacy issues. These concerns have increased with the introduction of the General Data Protection Regulation.
Ecosystem: This includes deciding who will be part of the network, how will they interact and handle changes. With a system that is the property of nobody and everybody at the same time, governance can be tricky. This is not something businesses are accustomed to.
When you have the right stakeholders on board, and know how the governance should work within a particular use case and which data structure to use, you have a valid reason to apply blockchain. I would still advise to evaluate if blockchain is truly required, or whether a conventional, centralised system would be cheaper and safer.

Santosh Singh, Head, Energy and Climate Change

Ankit Gupta, Manager, Intellecap
Santosh Singh, Head, Energy and Climate Change, and Ankit Gupta, Manager, Intellecap

The inherent features of blockchain technology (encrypting, distributed ledger and transaction verification without a central authority) can solve some of the major challenges in the renewable energy sector. A quick scan of blockchain technology usage highlights that it has immense potential in transforming the traditional energy generation/distribution operations as well as creating completely innovative offerings for the sector.

Blockchain has the ability to transform the climate action. In the Paris Climate Change Agreement, the government and private sectors have committed to put a cap on their carbon emissions. A mechanism is being proposed to facilitate trading of emission reductions. One of the core provisions of the Paris agreement is “no double counting of emission reductions”. Blockchain and distributed ledger can reduce double counting, increase transparency and make the carbon trading process easier. Veridium Labs, in partnership with IBM, has already demonstrated the potential of blockchain in this aspect. There are several other solutions that can help in emission tracking, trading and facilitating carbon finance.

Blockchain is a relatively new technology, but it has already permeated in the clean/ renewable energy space. There are more than 100 young start-ups across the globe leveraging blockchain technology. They have raised more than $320 billion during 2017-18. While start-ups are driving innovation in business models and creating new use-cases, big energy companies such as Siemens, GE and Kansai Electric Power have also started investing in blockchain technology. Firms have used blockchain, smart contracts and smart metering to transform their billing operations, grid and network management, and develop smart-grid solutions, but it is the startups and new players that are driving innovation in this space.

Start-ups are leading the way. They are promoting peer-to-peer energy trading, pay-as-you-go offerings, smart home energy systems, machine learning and artificial intelligence learning based customised products based on the energy consumption profile. In distributed solar power, blockchain technology has proved to be a boon. For example, the Brooklyn Microgrid project developed a small-scale community where users could generate and store power via solar panels, and trade with other community members. Eloncity has developed an architecture that offers a storage, exchange and usage network directly on blockchain without any power companies. The company’s system uses smart energy storage batteries alongside solar panels to allow users to create, use and store their own energy. Another enterprise, Power Ledger, allows users that have installed solar panels to sell their excess power at prices determined by them. SolarCoin, one of the oldest blockchain energy projects, offers tokens to users that generate solar electricity to promote adoption and usage. The SolarCoin Foundation gives energy producers blockchain-based digital tokens at the rate of one SolarCoin per MWh of solar energy produced. SolarCoin is spendable and tradable just like cryptocurrency. However, the big stories in these start-ups are now dictating a new era of renewable energy generation and distribution and forcing the big businesses to rethink their operations and strategy.

We have a long way to go. There are some inherent technical challenges in this technology (scalability, immutability, security and inefficient technological design, etc.) but for adoption in the energy sector, the key challenge is the regulatory and policy framework. Blockchain is still seen as emerging and experimental, but its increasing implementation, even at a small scale, will gradually build confidence in this technology for mainstream adoption.

Steven Vanholme, Program Manager, EKOenergy

There are undoubtedly many ways blockchain can be applied. But EKOenergy focuses only on the consumer aspect, that is, how can consumers prove that they use renewable energy and how can we avoid double counting of renewable attributes. In liberalised markets, there are established tracking systems, endorsed by the state or even run by state entities. Such systems need to be used to prove the origin of electricity that comes from the grid. Examples of such systems are RECs in Northern America and guarantees of origin in Europe. In such markets, any development in blockchain-based tracking systems needs to take place within the framework of the official systems. If not, there is a risk of double counting.

We see two main opportunities in this space:

The official tracking systems can integrate blockchain-based methods into their own database. This could be particularly interesting for smaller installations. Currently, several national issuers of RECs and guarantees of origin are studying the potential of blockchain in this space.
Companies could also use blockchain technology to add extra information. For example, if consumers want their energy consumption to match at any given time with the production of renewable energy, blockchain could be used in combination with guarantees of origin.
Different stakeholders in the power chain can benefit from the use of blockchain. In order to be reliable and avoid double counting, such systems need to operate within the boundaries of existing, official tracking systems. Where such systems are not available, the stakeholders should fulfil the quality criteria of the IREC Standard.

Going forward, to ensure the further development of the renewable energy market and maintain consumers’ trust, it is absolutely necessary that double accounting is avoided and that systems are made fraud-resistant. This can be achieved with the greater use of blockchain in the renewable energy sector.

As on June 30, 2018, 3.5 billion people across the globe did not have access to Internet. This divide in access is prominent in underdeveloped regions and among middle and lower-income groups. Affordability, availability and digital awareness are key deterrents that restrict this population from accessing Internet. This lack of access to Internet has created multiple challenges to development, such as illiteracy and unemployment.

A number of social enterprises have emerged since the early 2000s in response to the Internet access challenge that low-income and under-served populations face, and the movement has gained traction in the last few years. These enterprises are extending access to such ‘last-mile’ low-income urban, remote and rural populations, prioritising access challenges over enterprise viability, while seeking both.

The impact investment community, which seeks to create social or environmental benefits, directing capital to enterprises that accomplish impact goals, has traditionally looked beyond connectivity. In fact the sector ‘Internet connectivity’ does not even feature as part of the areas of focus on many of the leading impact investors’ propaganda. There is a rising need to acknowledge the social and economic impact created by these enterprises in order to magnify development outcomes.

Studies across the globe have identified and quantified the fact that connectivity enables economic growth and facilitates social development. Huawei’s quantitative analyses show that for each percentage increase in Global Competitiveness Index (GCI), there is a 1.4 to 1.9 percent increase in a nation’s gross domestic product (GDP). This may be relatively higher for emerging countries. Evidence from various studies also shows that connectivity has a positive impact on employment and earnings.

This impact is delivered through an expedited access to products and services across core sectors such as agriculture, education, financial services, health and more importantly, gender. myAgro, a mobile application, helped 18,000 farmers in Mali/Senegal save for seeds and fertilizers through custom made agricultural financial access products, leading to yield increases of 50 to 100 percent. The SMS Story in Papua New Guinea, known to exhibit low reading proficiencies in its elementary and primary schools, delivered daily mobile phone text message stories and lesson plans to teachers on children’s reading abilities. This programme helped to establish statistically significant results, among the treatment group that performed better on educational outcomes.

Micro-finance company Satya MicroCapital , which offers collateral-free credit, will use the funds to extend loans to micro, small and medium enterprises.

Micro-finance startup Satya MicroCapital has issued Non-Convertible Debentures (NCDs) to a private debt fund and a Microfinance Enhancement Facility S.A. (MEF), and raised Rs 40 crore in debt funding. Satya MicroCapital will use the funds to lend to Indian micro, small, and medium enterprises run by women.

Satya MicroCapital Limited is an NBFC-MFI that offers collateral-free credit to micro enterprises on the basis of a strong credit assessment platform and a centralised approval system. The company has adopted a unique Limited Liability Group (LLG) model for extending loans and ensuring repayment. The company’s LLG model distributes the liability among each group member, which exists only up to 10 instalments in bi-weekly collections.

Social touch to lending
Through this model, the company aims to add a social touch to lending by integrating modern technology into the micro-finance industry. Satya MicroCapital Limited primarily caters to women who own businesses or are looking for business expansion. The group lending model allows groups of borrowers to share the liability and responsibility to repay loans, while helping them build a strong credit profile to avail finance from traditional financial institutions.

Incepted in October 2016, the company has since registered impressive growth by achieving an Assets under Management (AUM) value of over Rs 300 crore in less than 2 years. Its current strategy is to use its platform to potential to increase efficiency in lending, reduce risks, and enhance overall customer experience.

Satya MicroCapital Limited launched its microfinance operations from its Bulandshahar Branch, erstwhile known as Sikandrabad Branch in Uttar Pradesh. The firm has since established 65 branches across 11 states, namely, Assam, Bihar, Chhattisgarh, Haryana, Orissa, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and West Bengal. According to the Intellecap study, the market size for microfinance in India translates to an annual credit demand of $5.7 to $19.1 billion, assuming loan sizes range between $100 and $250.

SBICap Ventures’ Neev Fund is set to infuse about $5 million in renewable energy firm Punjab Renewable Energy Systems (Prespl) to acquire a significant minority stake in what would be the Series-B funding round.

Prespl has also commitments of an additional $3-5 million funding in the same Series-B round from a different investor. Prespl, which was incorporated in 2011 to exclusively cater to the biomass fuel needs of Punjab Biomass Power, has expanded its operations into different verticals over the past few years.

The company aggregates, processes, stores and supplies biomass (agri-residues) such as paddy straw, cotton stalk, soya husk, maize cob, mustard stalk, etc, to biomass-based power plants and process industries. It also processes agri-residues into biomass briquettes – compressed blocks of biomass which is compatible with transportation over long distances – and supplies to process industries such as breweries and beverage plants.

SBICap Ventures’ Neev Fund to invest $5 million in renewable energy firm Prespl
By: Bhavik Nair | Published: March 1, 2019 4:25 AM
The company aggregates, processes, stores and supplies biomass (agri-residues) such as paddy straw, cotton stalk, soya husk, maize cob, mustard stalk, etc, to biomass-based power plants and process industries.

Prespl has also transitioned into a steam energy supply company where it provides uninterrupted steam to process industries at pre-decided rates throughout the year.
SBICap Ventures’ Neev Fund is set to infuse about $5 million in renewable energy firm Punjab Renewable Energy Systems (Prespl) to acquire a significant minority stake in what would be the Series-B funding round.

Prespl has also commitments of an additional $3-5 million funding in the same Series-B round from a different investor.
Prespl, which was incorporated in 2011 to exclusively cater to the biomass fuel needs of Punjab Biomass Power, has expanded its operations into different verticals over the past few years.

The company aggregates, processes, stores and supplies biomass (agri-residues) such as paddy straw, cotton stalk, soya husk, maize cob, mustard stalk, etc, to biomass-based power plants and process industries. It also processes agri-residues into biomass briquettes — compressed blocks of biomass which is compatible with transportation over long distances — and supplies to process industries such as breweries and beverage plants.

Monish Ahuja, managing director and chief executive at Prespl, said the company was expecting a significant boost in its revenues in coming times as it expected signing a number of contracts with many oil marketing companies.

“Hindustan Petroleum Corp Ltd (HPCL) is coming up with a plant in Punjab while Bharat Petroleum Corporation Ltd (BPCL) with a plant in Orissa. We are the company that has qualified in the global tenders for the supply of raw materials and expect the contracts to be signed in March. Besides these, there are many other contracts that we are following and believe ourselves to be the front-runner,” Ahuja said.

Private equity fund Zephyr Peacock India Growth Fund has led a ₹55 crore funding round in Shiksha Finance, a Chennai-based education finance company, said a senior executive. The deal was advised by Intellecap’s Investment Banking Group. .
The round also saw participation from existing investors of the company. Shiksha finances students in classes I-X and also provides financing for working capital and capital expenditure to schools that run classes from nursery/kindergarten to Class 12.
“₹55 crore of growth capital has been raised from new investor Zephyr Peacock India Growth Fund and existing investors Aspada Investment Company and Michael and Susan Dell Foundation,” said Shiksha chief executive officer and director V.L. Ramakrishnan. Shiksha will use the funds to expand its presence in existing locations and foray into new locations such as Maharashtra. It is currently present in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka.
Prior to the current round, Shiksha raised a ₹21 crore Series A round from Aspada and the Michael and Susan Dell Foundation in 2017. It has also raised an additional ₹115 crore of debt so far. “Shiksha is uniquely placed in the education financing ecosystem as a lender to both schools and students. Its product offerings help improve the quality of affordable private schools and help children from low-income backgrounds access quality education,” said Pankaj Raina, managing director, Zephyr Peacock India.
Access to quality education is an aspiration for most lower and lower middle income households in India and Zephyr Peacock India believes this is a multibillion dollar market, he said. “Zephyr Peacock has been closely tracking the education finance space. Our investment in Shiksha fits well with Zephyr’s investment thesis in the education financing sector,” Raina said.
Shiksha provides student loans to parents of school-going children, and school loans to educational institutions. The average student loan is for ₹25,000 for 12 months, while the average school loan is of ₹7 lakh for a tenure of four years, said Ramakrishnan. It has a loan book of ₹102 crore, which it aims to double over the next 5-6 quarters.

Tanya Philip, Associate with the Advisory Team, Intellecap, talks about leveraging strengths of the private sector to infuse greater efficiencies and resources that will help strengthen India’s public health

According to a study published by The Lancet, India’s performance in the global healthcare access and quality (HAQ) index was lower than our neighbours Bangladesh and Sri Lanka as well as all other BRICS nations. Poor quality of services in the public sector and a heavily commercialised private sector have together resulted in poor access to affordable and good quality healthcare for a majority of the Indian population.

One of the central issues plaguing the sector has been the abysmally low public spending on health. The National Health Policy 2017 aims to “increase government health expenditure as a percentage of GDP from the existing 1.15 per cent to 2.5 per cent by 2025.” This is unimpressive when the current global average stands at about 6 per cent, according to The Lancet. Furthermore, the World Health Organisation noted that it is difficult to get close to Universal Health Coverage at less than 4 per cent -5 per cent.

This leaves much to be desired from non-governmental stakeholders in order to help bridge this immense national resource gap. Niti Aayog’s proposal to rope in private sector providers for the treatment of non-communicable diseases demonstrates the government’s willingness to augment its healthcare response capacities by bringing private players on board. Additionally, the central government’s most recent Ayushman Bharat health insurance scheme seeks implementation support from the private sector by means of expanding their scope of operations. Overall, aside from the capital constraints, the sheer size of the national healthcare challenge at hand demands for a more collaborative approach.

Much of the conversations around healthcare reform recently have been constrained by ideological debates on public versus private. The ground reality is that about 70 per cent of healthcare service delivery in India today is driven by the private sector. Leveraging the strengths of the private sector can only infuse greater efficiencies and resources that will help to strengthen our national response to our healthcare challenges.

That being said, any collaborative healthcare delivery model should be based on clear terms and conditions, defined partner obligations and performance indicators monitored over a stipulated period of time in order to achieve common, pre-determined healthcare objectives. In addition, consideration needs to be given to technology changes that are likely to impact how healthcare is delivered.

The 108 Emergency Management and Research Institute (EMRI) is a unique public private partnership model between state governments in India and private players which employs an ‘operate and maintain’ service contract between the two. This initiative undoubtedly fills an existing needs gap with coverage estimated to be 750 million people at an annual per capital cost of less than $ 0.25. However, insufficient supervision and a lack of due diligence has caused some concerns recently. Audit reports noted that the MoUs were signed in a manner that undermined the ability of the state to enforce conditions of service and levy penalties for deficiencies. Competition is crucial for the success of the contracting and bidding process since it helps keep costs down and maintain high services quality. Unfortunately, there is not much competition in the emergency medical services suppliers market in India. More competition could be infused through shorter contract periods. Performance needs to be more closely linked to payments. Outcome indicators around quality of service, response time and utilisation rates need to be closely monitored and certain service delivery standards should be set as pre-requisits for contract reapplication.

Thus, the design and management of service contracts under PPPs in healthcare can determine the extent to which they can succeed. The absence of well designed and implemented service contracts should not be read as a failure of PPPs altogether. The key ingredients for the success of a PPP include the transfer of risk from public to private, strictly monitored performance indicators and government ownership of assets at the end of the contract period.

This is, in no way, a means of absolving the government of its financial responsibility of increasing budgetary allocation for public provisioning of healthcare services. Without exploring more collaborative, innovative approaches to help nudge things along, India’s public health crises will only multiply over the years.

Mumbai, 3rd Dec: Urvashi Devidayal, Sankalp Lead India , Intellecap and Prachi Maheshwari, Gender Lead, Intellecap as part of our yearlong content partnership with Forbes India contribute the third story in the Forbes series.

As a quick recap the first story titled ‘Instant loans: Alternate data to drive next financial inclusion wave’ in this Forbes Series was authored by Atreya Rayaprolu, Co-Founder and CEO Tribe3. The second story titled ‘Smart villages: Driving development through entrepreneurship’ was authored by Santosh Kumar Singh, Director, Intellecap and Ankit Gupta, Manager, Intellecap.

Titled ‘What most women-led enterprises in India have in common’ the article by Urvashi and Prachi bears its genesis to a recent economic survey which has highlighted significant increase in women-led enterprises in India.

The author’s opine that in India today it is easy to find successful micro-enterprises in the vicinity run by women, who not only manage their household but also financially support their families and educate their children. While these are often home-based businesses they do have the potential to scale but the entrepreneurs are unable to do so. The authors note that there has been no dearth of schemes, initiatives and programs implemented by the government and the private sector, to increase access to finance for women entrepreneurs, but most of these programs exclude majority of women-led enterprises.

Delving into the challenges, the authors go on to talk about how there is a high risk perception of women entrepreneurs and how there are several ways to address this perception and encourage women led enterprises to scale and grow.

Speaking about the finance sector, the authors cite a recent International Finance Corporation (IFC) report which pointed out that women employees constitute less than 20 percent of the workforce in banks. These numbers are even fewer for women fund managers in private equity firms. Thus the problem becomes cyclical where with low representation of women in financial sector, unconscious gender biases of our patriarchal society often influence the investment decisions, leading to high rejection rates for women-led businesses.

Speaking about catalyzing women investing in women, the authors urge the need to move beyond loans and borrowings, and to look at global trends and how this very aspect to go beyond conventional schemes and initiatives has encouraged the rise of “Women Investing in Women”, where venture funds set up by women are investing in women entrepreneurs. Today almost 70 percent of such gender lens investing funds in developed countries were either seeded by women investors and/or raised from women as limited partners. The authors name several such funds across that are not only investing in women entrepreneurs but are also running targeted interventions to build capacity of women as angel investors.

In conclusion, the authors bring the conversation back to India, and ask some pertinent questions around creating a conducive atmosphere and a positive narrative that creates real change on the ground and brings about a paradigm change in the way of our thinking to build an empowering and an inclusive society.

While cities cover only two per cent of the global land area, they contribute around 70 per cent of the global greenhouse emissions, one of the main drivers of climate change.

The UN forecasts that urbanisation and population growth could add another 2.5 billion people to urban populations by 2050, with almost 90 per cent living in Asia and Africa. Consequently, the urban contribution to greenhouse gas emissions and climate change will only increase with time.

As a response, various stakeholders have designed climate change resilience products including cool roofs, home insulations, drip irrigation solutions and solar home systems that have seen heightened interest in India. While such products have seen a market, the uptake is concentrated among the richer sections.

The urban poor, who constitute almost 30 per cent of India’s urban population, do not have the knowledge or the capacity to pay for such products. It has always been a challenge to symbiotically combine all four components (informed customer targeting, low-cost marketing, innovative distribution and sales, and nurturing consumer goodwill) to design a marketing strategy for the urban poor. As a response, some organisations have started leveraging community-level leaders (CLLS) as marketing channels for such products.

The rationale for the CLLs comes from the effectiveness of the model in building long-term products resilient to climate change while simultaneously creating livelihoods. Some best practices that can be used to strengthen the efficacy of the CLL mode are:

* Design a product identification framework tool: Each product should be analysed on the basis of four parameters: a) demand for the product (number of households), b) affordability (price), c) profitability (percentage of price), and d) scalability (potential demand across different urban agglomerations). On the basis of analysis, only those products which score high on all parameters should be offered to the market.

* Conduct on-ground demand assessment: Understanding the customer becomes more important in such cases, particularly since the customers knowledge of the product is limited. Hence awareness levels, willingness to pay and customer demand becomes more critical. Such an on-ground assessment can help further shortlist products for a particular set of homogeneous households.

* Provide easy financing options: It is beneficial to help CLLs establish close networks with MFIs and other financial institutions to provide financing facilities to potential consumers, hence enhancing their ability to pay and increasing uptake.

* Segment CLLs based on skillsets and motivation: Classification of CLLs as per their sales skills and motivation is essential for success. Selling different products require different skillsets and a quick analysis can help in this matchmaking. Some parameters which can be used to assess skills include age, educational qualification, business experience, and technical skillsets.

* Capacity building: CLLs need a certain degree of training and it is observed that CLLs find it easier to sell better when trained rather than through close association with their communities.

* Build ownership in CLLs: Instead of making the product available free-of-cost, CLLs should be asked to invest in the product. If required, finance should be made available by partnering with co-operative banks and MFIs; that way one can build ownership in CLLs.

* Design standardised operational procedures (SOPs): Since the business model includes partnerships both with CLLs and product manufacturers, it is necessary to design SOPs to simplify the entire delivery process.

Over 4 billion people around the world face unmet needs in core areas such as food, water, energy, health-care and housing. The market potential for these low-income populations is huge: Approximately 4.5 billion low-income people globally represent an annual purchasing capacity of US$ 5 trillion (PPP), with India, East Africa and South East Asia accounting for a sizable chunk of this market. Yet servicing this market is fraught with challenges, including customers’ limited ability to pay, poor infrastructure and latent demand. Catering to this market requires frugal innovation, which is about transforming adversity into opportunity, enhancing value and ultimately doing more with less, thereby impacting more people.

Many firms – both startups and corporates – have begun to design frugal, market-based solutions that include product and business model innovations to meet the unmet needs of billions of underserved customers. In Kenya, for example, Pad Heaven makes re-usable sanitary towels from banana fibers, and Ecopost uses plastic and agricultural waste as a resource to manufacture sustainable materials for the building, construction and transport industries. India is also a hotbed of frugal innovations, which spread across sectors. For example, Saral Designs markets an automatic machine that allows organizations to produce low-cost sanitary napkins, Bhagwan Mahaveer Viklang Sahayata Smiti provides the Jaipur foot – a low-cost prosthetic leg, and Banka Bioloo sells sanitation systems that eliminate the need for off-site disposal of human waste. Each of these products highlights how such innovations can be game changers.

But frugal innovations are not just about products: Great potential also lies in business model innovation. Frugal innovations in services can include deep specialization in a niche segment of a huge market, tiered pricing systems and efficient use of human capital. These innovations respond not only to a lack of skilled human capital, but to an institutional void. For instance, Unilever’s small, affordable detergent sachets are priced at a more palatable level for the low-income populations in India and Africa. And Aravind Eye Care’s approach to performing cataract surgeries at large scale without compromising on quality highlights how process innovation can ensure inclusivity and service delivery in a sustainable manner.

Frugal innovation is also not limited to low–tech sectors. It can require, or be combined with, frontier science and technology. Products like Swach a high-tech portable water filter developed by Tata, HealthCubed Inc.’s Health Cube – an integrated, tablet-based, portable point-of-care diagnostic test device, and Agatsa’s pocket-sized 12-lead electrocardiogram have demonstrated how technology can not only be an enabler but an amplifier to both product and process innovations.

Lessons for the Circular Economy

While frugal innovations are commonly associated with developing economies, these innovations are not only for resource-constrained users – and they also address the issue of resource scarcity. The current “take, make and dispose” economy is not sustainable. Economic productivity is already being curbed by the rapid depletion of existing and readily available natural resources. These constraints require a shift in thinking towards a more circular model focusing on resource productivity, and a shift towards a “make, share and remake” model. This will be a key driver towards sustainability for frugal innovations of the future.

Principles from frugal innovations are directly applicable to this circular economy, as generating value from waste is common across African and Indian startups. For example, Kodjo Afate Gnikou built a $100 3D printer from electronic waste. And in Europe, the firm Qarnot has developed QH.1, a high-performance computing server that uses “waste heat” from its microprocessors to heat homes and other buildings.

An assessment of value chains in rural India with high women participation has interesting findings
“The Indian rural retail segment is dominated by unorganised, independent, owner-managed shops, majority of which are set up within household premises and often managed by women,” said Himanshu Bansal, Associate Partner-FS Advisory, at advisory services firm Intellecap, part of the impact investment-focussed Aavishkaar-Intellecap Group.

Intellecap was selected as project advisor by international development agency USAID recently to identify and digitise rural value chains where high volumes of financial transactions occur, representing potential for digitisation.

In a project that aimed to expand acceptance and use of digital payments in a rural setting, women were identified as key beneficiaries as they play an important role in the rural ecosystem, both as workforce or labour on farm and non-farm related activities and as micro entrepreneurs.

Take, for instance, the dairy sector. It contributes nearly 18 per cent to agricultural GDP and provides livelihood to over 75 million women. Food and beverages too provide employment to over 48 million people, with high women participation.

Noting that rural women “have an appreciable, albeit under-stated presence in all facets of rural life”, Bansal felt it is but natural that they become the fulcrum of activities around digitisation of rural value chains, digitisation of households, and financial transactions.

The findings of the study initiated by Intellecap revealed that though there exist multiple rural value chains with significant women participation — like poultry, fisheries, rural retail, apparels and textiles, beauty and wellness, several barriers line the way, including low literacy levels, low financial awareness and a knowledge gap on digital transactions. What also came to the fore was the significant potential of Digital Financial Services (DFS) to not only extend financial inclusion but also digitise core areas of multiple value chains.

High potential
The study, ‘Digitising rural value chains with high women participation in India’, showed that though rural retail and micro finance are common intersections for financial transactions for rural women, what remains relatively discreet is the influence of these segments on rural communities as enablers of change.

“Rural communities, especially rural women, are largely under-served as far as formal financial services like savings, credit and insurance are concerned,” Bansal said, adding that digital inclusion of women has the potential to empower them to make better financial decisions and also drive value chain and household consumption spending. Pointing out that the retail sector has high women participation, with over 2.4 million women-led establishments, Bansal said, “While majority of rural retail stores are informal establishments, a few private-led initiatives such as the Sakhi retail model in rural Maharashtra around Solapur and Mahol are managed by women, through the assistance of self-help groups, and have expanded rapidly, offering value added services.”

However, rural digitisationneeds the integration of digital payments into the rural ecosystems. “Enabling merchant payments through digitisation of the rural retail store can go a long way in building confidence among rural users for using digital payment platforms,” Bansal said, Rural retailers, through digital financial transactions, could also get improved access to credit to grow their businesses.