How Innovative Business Models Can Bring Cheap Energy to Poor Communities

ome 1.2 billion people — or 16% of the global population — don’t have access to electricity. Entrepreneurs are developing innovative, off-grid energy solutions to bring power to those populations, but challenges of varying kinds are slowing down their progress.
For Nikhil Jaisinghani, co-founder of Mera Gao Power, a provider of low-cost, off-grid solar power to villages in India’s Uttar Pradesh state, a prime challenge is attracting investors who are used to large, publicly funded grid-based power projects with government subsidies, and are unfamiliar with projects like those of Mera Gao Power. “We’re trying to put this into a model where we’re serving ultra-poor customers without public funding, and we’re trying to create a profitable model with a three- to four-year payback period on infrastructure,” he said.
In Australia, David Allen works for a family office that has met with success in its investments in renewable energy projects aimed at benefiting indigenous communities and reducing the carbon footprint. But Allen, who champions a for-profit model for sustainability, finds it disconcerting when the entrepreneurs he backs prefer to service middle-income consumers instead of stretching their business model to reach poorer people at the bottom of the pyramid. “That’s one of the risks we’re now turning our attention to,” he said. “How can we bake the social purpose into some of these businesses?”

Jaisinghani and Allen shared their perspectives on the guiding principles for impact investing with Knowledge@Wharton for a new podcast series called “From Back Street to Wall Street.” The series is being produced in partnership with Impact Investment Exchange (IIX), a Singapore-based organization that serves as a bridge between investors and development goals in Asia. (Listen to this episode using the player at the top of this page. Find the first episode here and the second episode here.)
‘Lighting-as-a-Service’ Model
Jaisinghani was struck by the idea for Mera Gao Power (“Mera Gao” means “My Village” in Hindi) some two decades ago when he worked in the Peace Corps in a small village in Nepal. The village had no electricity, and people got by with kerosene lanterns. Over the years, he thought up a “lighting-as-a-service” business model, and founded his firm in 2010 in Lucknow, Uttar Pradesh
Mera Gao Power started out by designing a solar-powered micro grid that provides seven hours of electricity from 7 p.m. every day to village households in Uttar Pradesh. Priced at less than $2 a month, the service powers two light points and a phone charger; the latter is crucial for households to charge their mobile phones, on which they watch movies and other entertainment.
The company started with a few pilots in 2010 and 2011, and started growing slowly in 2012. Today it serves some 20,000 households with 100,000 people in 1,500 communities of Uttar Pradesh. Its plan is to grow to 50,000 households by end-2018. “We wanted to focus on a level of service that was going to be as impactful as possible, but still affordable to our customers,” Jaisinghani said.
Mera Gao Power has enabled people to earn more income, such as shop owners who can stay open for longer hours in the evening. “The biggest impact we can measure is on the amount of time children spend studying,” said Jaisinghani