Inclusive Business Shows Promising Approach to Increasing Clean Power Access

As the Philippines moves towards accelerating use of cleaner energy sources and electrification of far-flung areas off the grid, Inclusive Business models in the energy sector show a promising approach to powering 2.36 million Filipino households without electricity.

Hybrid Social Solutions, Inc. (HSSi), an example of an Inclusive Business model in the energy sector, has already made safe and efficient solar power accessible to more than 220,000 individuals. These people used to depend on alternative sources of power and lighting that hinder productivity and pose health and safety hazards: candles, kerosene, batteries, and generators for their lighting and electricity needs.

Companies that implement Inclusive Business models make relevant products and services accessible to low-income communities. They also provide livelihood opportunities to poor communities by tapping its members as suppliers or partners. Because of their capacity to combat poverty and foster growth, Inclusive Business models are currently one of the preferred investment activities under the 2017-2019 Investment Priorities Plan (IPP). Agribusiness and tourism enterprises with qualified Inclusive Business models in tourism are eligible for five-year fiscal and non-fiscal incentives.

“Creating more Inclusive Businesses in the energy sector has the potential to reach untapped markets that continue to live off the grid,” said Trade Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo, PhD. “As we try to find a balanced approach in meeting energy needs and protecting the environment, we see Inclusive Business playing an essential role in tapping more sources of clean power,” he added.

Last-mile distribution approach

While solar technologies are available in the market, few are designed to meet the needs of rural customers. Other challenges include the absence of financing for high up-front acquisition costs, inadequate product training that leads to improper use, and the lack of trained technicians and service centers.

To address challenges on the availability of solar-powered products, HSSi offers durable, affordable, technically superior solar products that meet the basic energy requirements needed for shelter, livelihood, education, and health. HSSi only sources its materials from technology suppliers who can provide spare parts, consistent quality, and at least two years’ warranty.

HSSi immerses with local communities and thoroughly consults its members regarding new products. This helps HSSi ensure that the design and functions of the products can help improve the community’s way of life.

To help fisher folk, for example, HSSI developed a marine grade fishing light bundle with a greenish hue that attracts target fish at 10 meters underwater. This product is designed to last 12 hours and withstand daily use. Replacing kerosene lamp with this bundle helped the fisher folk catch up to 12kgs nightly. This also cuts lighting costs resulting to savings of more than 300 pesos per night.

Impact assessments of HSSi’s solar lamps also revealed that household cash flow increases by 25 percent. This is because of reduced costs on kerosene and batteries, as well as higher income resulting from increased productivity. Students also get to study 45 percent longer. In terms of health and safety, solar lamps decrease smoke inhalation and the risk of fires.

HSSi organizes Hybrid Value Chain (HVCs) that reach out to consumer groups, make micro-financing available, and provide first-level technical support to communities with limited or no power. HVCs include technology partners, accredited technicians, and strategic channel partners that include people’s organizations, microfinance institutions, and cooperatives. These strategic channel partners buy HSSI’s products and resell them to their members.

The establishment of Solar Hubs in municipalities closest to off-grid markets also plays a key role in HSSi’s strategy to power more Filipino households. As the building block of HSSi’s rural operations, a Solar Hub plays many important roles: meeting venue, showroom, service center, warehouse, research and development center, and emergency center.

HSSi’s first Solar Hubs were constructed in Calbayog, Samar and Baler, Aurora in 2015. Between 2016 and 2017, two new Solar Hubs were opened in Narra, Palawan and San Jose, Antique. As of May 2017, HSSi is in the process of building Solar Hubs in Cordon, Isabela and Roxas, Palawan .

A replicable model

HSSi’s current target is to open 21 new Solar Hubs by the end of 2020, the locations for which have already been identified. It also targets to reach the remaining villages with poor or no electricity by incorporating more microfinance institutions, cooperatives, and pawnshops in its HVCs. HSSi projects that 80-100 Solar Hubs are needed to power all communities without access to power.

In the long run, HSSi plans to open Solar Hubs in Indonesia, Myanmar, and Malaysia. HSSI’s entry into these markets offers a potential of uplifting 130 million people in the ASEAN who still experience energy poverty.

HSSi was the only company from the energy sector to be nominated in the first ASEAN Inclusive Business Awards 2017, an integral part of ASEAN Business Awards initiated by BOI in partnership with the Asian Development Bank, ASEAN Business Advisory Council, Credit Suisse, and the International Finance Corporation.