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Improved stoves in India: A study of sustainable business models

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Abstract:

Burning of biomass for cooking is associated with health problems and climate change impacts. Many previous efforts to disseminate improved stoves – primarily by governments and NGOs – have not been successful. Based on interviews with 12 organizations selling improved biomass stoves, we assess the results to date and future prospects of commercial stove operations in India.

Specifically, we consider how the ability of these businesses to achieve scale and become self-sustaining has been influenced by six elements of their respective business models: design, customers targeted, financing, marketing, channel strategy, and organizational characteristics.

The two companies with the most stoves in the field shared in common generous enterprise financing, a sophisticated approach to developing a sales channel, and many person-years of management experience in marketing and operations. And yet the financial sustainability of improved stove sales to households remains far from assured. The only company in our sample with demonstrated profitability is a family-owned business selling to commercial rather than household customers. The stove sales leader is itself now turning to the commercial segment to maintain flagging cash flow, casting doubt on the likelihood of large positive impacts on health from sales to households in the near term.

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Energy Policy
Authors
Gireesh Shrimali
Xander Slaski
Xander Slaski
Mark C. Thurber
Mark C. Thurber
Hisham Zerriffi
Hisham Zerriffi
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Morse panelist at the 2011 Silicon Valley Energy Summit

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PESD's Richard Morse gave a talk titled "Remaining Uncertainties in the California’s Cap and Trade Program” during the summit's "California’s Carbon Policy – Implementing a California-Specific or California and Regional Cap-and-Trade" session.

The Silicon Valley Leadership Group and Precourt Energy Efficiency Center hosted the 2011 Silicon Valley Energy Summit held on Friday, June 24, 2011 at Stanford University.

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Transmission Policies to Unlock America's Renewable Energy Resources

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On behalf of PESD, Stanford co-hosts PIE, TomKat, and SIEPR, and external sponsors Pillsbury Winthrop Shaw Pittman and the Kauffman Foundation, convened an all-day conference on September 15 on “Transmission Policies to Unlock America’s Renewable Energy Resources”   
   
The traditional transmission paradigm was well-adapted to fossil fuel plants built near cities and operated by vertically-integrated utilities.  We need a whole new transmission paradigm to realize the potential of intermittent wind and solar generation in today’s wholesale markets.  
   
The conference sessions (see Agenda) focused on different aspects of what this new paradigm will have to look like, focusing on the Western region.  How can markets for renewable energy credits help drive transmission policy?  Who will pay for new transmission that straddles state lines and service areas?  How can environmental impacts be weighed without bogging down transmission planning?  
   
Our distinguished speakers and discussants have many years of experience working on precisely these issues from the academic, industry, nonprofit, and government perspectives.  This event brought new insights into how to move forward on transmission in the West, and we thank everyone who participated.

 

For conference photos, click here

Opening remarks by Frank Wolak, Director, Program on Energy and Sustainable Development

 

Session 1: The Paradigm Shift in the Role of the Transmission Network

Speaker—Lorenzo Kristov, Principle, Market and Infrastructure Policy, California Independent System Operator (ISO)

Discussants: James Bushnell, Associate Professor, UC Davis Department of Economics and Udi Helman, Director, Economic and Pricing Analysis, BrightSource Energy

 

Session 2: Policy Tools for Meeting Renewable Energy Goals

Speaker—Harry Singh, Vice President, Goldman Sachs

Discussants: Sydney Berwager, Director, Strategy Integration, Bonneville Power Administration and Julie Fitch, Director, Energy Division, California Public Utilities Commission

 

Session 3: Developing a Regional Transmission Planning Process

Speaker—Brad Nickell, Director of Transportation Expansion Planning Western Electricity Coordinating Council

Discussants: Scott Cauchois, Transmission Expansion Planning Policy committee Chair, Western Electricity Coordinating Counsil and Rebecca Wagner, Commissioner, Nevada Public Utilities Commission

 

Session 4: Paying for Transmission

Speaker—Douglas Kimmelman, Senior Partner, Energy Capital Partners and Perry Cole, Managing Director, Energy Captial Partners

Discussants: Michael Hindus, Partner, Pillsbury Winthrop Shaw Pittman LLP and Darrel Thorson, VP, Business Development North America, BP Wind Energy

 

Session 5: Environmental Impacts of Transmission Siting

Speaker—Sean Gallagher, Managing Director, Government and Regulatory Affairs, K Road Power

Discussants: Julia Souder, Project Development Manager, Clean Line Energy Partners and Carl Zichella, Director of Western Transmission, Natural Resources Defense Council

 

Session 6: Lessons for Transmission Planning and Pricing   
from Other Jurisdictions

Speaker—Benjamin Hobbs, Director, Environment, Energy, Sustainability,  
and Health Institute, Johns Hopkins University

Discussants: Cristian Munoz, Engineer, AES Gener, Santiago, Chile and  
Alex Papalexopoulos, President and CEO, ECCO International, Inc.

 

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PESD receives smart grid research grant from Stanford's TomKat Center for Sustainable Energy

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The TomKat Center for Sustainable Energy has awarded four research grants totaling $1.2 million to Stanford University researchers for smart power grid related studies.  One of the four grants went to a PESD-led project that will help regulators overcome barriers to the development of electricity transmission lines needed to facilitate renewable energy deployment.  At present, the lack of adequate transmission infrastructure makes it difficult to connect generators in regions with rich wind or solar potential to major population centers.

One of the biggest challenges in the current transmission planning process is accurately characterizing the benefits of transmission lines to build a case for their development.  "Our research will develop key analytical tools to help regulators and policymakers assess the economic and environmental benefits of transmission expansions to support renewable generation," Wolak said. Such tools can ultimately be built in to grid planning, expansion, and pricing methodologies.

 

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New PESD Working Paper details challenges of designing carbon offsets for the transportation sector

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Programs to enlist developing countries in climate change mitigation by granting credits for carbon emissions reductions across entire sectors like transportation are quite appealing in principle. However, as researcher Adam Millard-Ball shows in PESD Working Paper #97, "Adverse Selection in an Opt-In Emissions Trading Program: The Case of Sectoral Crediting for Transportation, " any practical implementation of such schemes would entail thorny trade offs between economic efficiency, environmental effectiveness, and political acceptability.

Sectoral crediting mechanisms such as sectoral no-lose targets have been proposed as a way to provide incentives for emission reductions in developing countries as part of an international climate agreement, and scale up carbon trading from the project-level Clean Development Mechanism to the sectoral level.

Countries would generate tradable emission credits (offsets) for reducing emissions in a sector below an agreed crediting baseline. However, large uncertainties in the regulator's predictions of the counterfactual business-as-usual baseline are likely to render sectoral no-lose targets an extremely unattractive mechanism in practice, at least for the transportation case study presented here. Given these uncertainties, the regulator faces a tradeoff between efficiency (setting generous crediting baselines to encourage more countries to opt in) and limiting transfer payments for non-additional offsets (which are generated if the crediting baseline is set above business-as-usual).

The first-best outcome is attainable through setting a generous crediting baseline. However, this comes at the cost of either increased environmental damage (if developed country targets are not adjusted to account for non-additional offsets), or transfers from developed to developing countries that are likely to be too high to be politically feasible (if developed country targets are made more stringent in recognition that many offsets are nonadditional). A more stringent crediting baseline still generates a large proportion of non-additional offsets, but renders sectoral no-lose targets virtually irrelevant as few countries opt in.

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PESD releases study of Nigeria's national oil company NNPC

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Nigeria’s national oil company NNPC is at the center of a profoundly dysfunctional oil sector in a country that some argue embodies the “resource curse.” In a new study, PESD Associate Director Mark C. Thurber and PESD affiliated researchers Ifeyinwa Emelife and Patrick Heller find that NNPC’s persistent underperformance stems from its role as the linchpin of a sophisticated and durable system of patronage.

Abstract

Nigeria depends heavily on oil and gas, with hydrocarbon activities providing around 65 percent of total government revenue and 95 percent of export revenues.  While Nigeria supplies some LNG to world markets and is starting to export a small amount of gas to Ghana via pipeline, the great majority of the country's hydrocarbon earnings come from oil.  In 2008, Nigeria was the 5th largest oil exporter and 10th largest holder of proved oil reserves in the world according to the U.S. Energy Information Administration.  The country's national oil company NNPC (Nigerian National Petroleum Corporation) sits at the nexus between the many interests in Nigeria that seek a stake in the country's oil riches, the government, and the private companies that actually operate the vast majority of oil and gas projects.

Through its many divisions and subsidiaries, NNPC serves as an oil sector regulator, a buyer and seller of oil and petroleum products, a technical operator of hydrocarbon activities on a limited basis, and a service provider to the Nigerian oil sector.  With isolated exceptions, NNPC is not very effective at performing its various oil sector jobs.  It is neither a competent oil company nor an efficient regulator for the sector.   Managers of NNPC's constituent units, lacking the ability to reliably fund themselves, are robbed of business autonomy and the chance to develop capability.  There are few incentives for NNPC employees to be entrepreneurial for the company's benefit and many incentives for private action and corruption.  It is no accident that NNPC operations are disproportionately concentrated on oil marketing and downstream functions, which offer the best opportunities for private benefit.  The few parts of NNPC that actually add value, like engineering design subsidiary NETCO, tend to be removed from large financial flows and the patronage opportunities they bring. 

Although NNPC performs poorly as an instrument for maximizing long-term oil revenue for the state, it actually functions well as an instrument of patronage, which helps to explain its durability.  Each additional transaction generated by its profuse bureaucracy provides an opportunity for well-connected individuals to profit by being the gatekeepers whose approval must be secured, especially in contracting processes.  NNPC's role as distributor of licenses for export of crude oil and import of refined products also helps make it a locus for patronage activities.  Corruption, bureaucracy, and non-market pricing regimes for oil sales all reinforce each other in a dysfunctional equilibrium that has proved difficult to dislodge despite repeated efforts at oil sector reform.

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Climate Policy Instruments in the Real World

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