About Low Income Energy Services
An important complement to PESD's research on climate change policy and established fuel and power markets is our ongoing study of how to supply more and higher-quality energy services to the poorest populations around the world. We seek to understand the kinds of institutional arrangements that can allow delivery of modern energy services to the poor at scale and in a durable way, as opposed to whether a specific energy technology can be made to work on a one-off basis. Previous PESD research has examined how sustainable business models can be created for distributed generation of electricity. Current work focuses on the potential for commercial approaches to facilitate wide dissemination of improved household stoves.
The enormous potential for cleaner-burning household stoves to yield health, development, and environmental benefits has animated over 30 years of government- and nonprofit-led stove distribution programs, almost all with unsatisfying results (with the notable exception of China's national stove program). By reviewing existing literature on stoves as well as a variety of other technologies aimed at low-income populations, we identified three principal obstacles to adoption of new technologies by the poor: 1) a lack of perceived value associated with the technology, 2) cost barriers, and 3) the magnitude of lifestyle change the technology entails. Commercial stove programs in theory could have advantages of sustainability and scalability relative to charitably-oriented efforts, but all three of the above obstacles loom larger for stoves than for many other products.
Our stove-related research is currently focused on India as one of the largest potential markets for improved stoves. The research incorporates both case-study-based and quantitative methods. We have performed a survey of 14 companies that are attempting to sell cookstoves in India on a commercial or semi-commercial basis. The survey has yielded a number of insights so far. One is the importance of combining a hard-headed commercial mindset in operations with a deep and patient source of enterprise financing. Purely charitable operations find themselves unable to create a viable and scalable supply chain, insufficiently connected to real customer needs, and vulnerable to downturns in donor largesse. Conversely, organizations hoping to receive a venture-capital-like return on investment are inevitably disappointed by the realities of serving very poor populations.
Alongside this qualitative investigation of commercial stove efforts, we aim to develop an econometric model of cooking mode choice and utilization. The full set of data we need to construct the model includes: attributes of all cooking modes employed in a household, the relative prices of both cooking implements and fuel for these different cooking modes, household demographic characteristics, and factors related to the sales and marketing of different cooking implements and fuels. We plan to conduct a household survey in two Indian states in order to collect this information. The model constructed from the survey data should help stove businesses better match their products and marketing to customer preferences, researchers better understand drivers of stove adoption, and governments implement more effective policies to encourage use of improved stoves.