Introduction to the Entrepreneurs

The first case study comes from India. By the early 1990s, India had developed a strong manufacturing and distribution base: installed production capacity of 18 megawatts per annum, 5 cell manufacturers, 8 module manufactures, and 50 system integrators who designed, installed and sold total systems.41 But none of these players were particularly interested in selling directly into the rural markets. The reason for this was that they preferred selling into the Government programmes:

Government orders are easy as there is a chunk to be allotted, with few decision-makers who can be influenced. But in the rural markets, there are millions of decision-makers to try and influence, and to do this requires more effort, meaning that your costs go up and, at least in the short term, your profits go down.42

Similarly, the general manager of a major Indian PV manufacturer noted that:

The consolidated market is easier to serve . as the rural markets are dispersed. Here, the problem is 'How do I reach them?'. The reach is where the costs come in for us. You need many of these little, little, little centres, and then one needs to manage these centres, and they will grow and how to orchestrate them?43

Thus, as a World Bank review of the market revealed at the time, although 'there were projects that would lead to PV being placed in rural areas, such as lighting for tea plantations', there were 'none that led to building rural-sector delivery mechanisms'.44

In most states in India, the Government programmes for solar were too strong, crowding out any direct commercial sales of solar. But in Karnataka, the Government solar programme was largely non-existent at this time - intentionally so, as it would turn out. This created a space for the American entrepreneur profiled earlier to enter in 1993 and forge a working relationship with an Indian entrepreneur that would soon transform into a commercial partnership.

In 1995, the two entrepreneurs established a company that initially sold 40 solar systems on credit to rural customers in Karnataka. It was seeded with as little as US$30,000 in capital. It would have to operate on a shoestring for several years, until the entrepreneurs were able to mobilize sufficient resources to grow. During this time, invaluable lessons would be learned, and the company would serve as an example to policymakers and other businesses that it was indeed possible to set up commercial operations serving the rural solar markets in India.

Our second case study comes from Indonesia. In 1987, R&S - a Dutch manufacturer of solar modules partly owned by Shell - established a sales office in Indonesia, in which Philips also took a stake in 1991. It is estimated that both invested roughly US$3 million in the business. The sales office was successful in selling 20,000 systems to the Government over a six-year period, prior to Shell and Philips deciding to exit the business in 1993. Although the business did not directly develop the rural solar markets in Indonesia, the managing director's experience in running the Indonesia operation informed him that there was a big potential in doing so.

Rather than leave with the business, the managing director (heretofore 'the entrepreneur in Indonesia') decided to stay and pursue his vision. In 1994 he established a company, and started selling solar directly to the unelectrified parts of Indonesia. Initially the company served West Java and to a lesser extent Central Java. But by mid 1995, it had also expanded into the province of Lampung in Southern Sumatra. By mid 1996, there were 46 rural sales points cum service centres, serving between 50 and 60 sub-districts in three provinces in Indonesia. There were a total of 180 employees: 40 in head office engaged in administration and system assembly, and in each service centre a local manager, a secretary, and one or two assistant technicians.

Sales grew very quickly, because the entrepreneur combined a strong market infrastructure with four-year credit terms for his customers. Between 1994 and July 1996, the company sold over 8000 solar systems - an unprecedented figure in the diffusion of solar at this time. But it was never easy, and the company was always short of cash. Eventually disaster struck, but before it did, the entrepreneur in Indonesia had set an example that would go on to radically influence the diffusion of solar in other countries.

Our final case study comes from Sri Lanka. Two entrepreneurs, then living in Canada, returned to Sri Lanka as part of a post-university trip around the world. It was mid 1985. They didn't know it when they set out on their journey, but once in Sri Lanka they would be gripped by a vision of selling solar and stay.

Their initial interest was in solar water pumping - to develop a mobile solar pump, with only a secondary use for lighting. In pursuit of this market, they set up a company and worked on sourcing machinery to manufacture solar modules in Sri Lanka. In 1988, they teamed up with a third entrepreneur and together secured vital start-up capital from local banks. With investment capital in hand, they were able to procure the machinery they needed, and in the same year they produced their first solar modules.

But while they initially thought the market would be for water pumping, they quickly found that the 'real' market was selling solar to households that were reliant on battery charging for TVs and kerosene for lighting. They would learn many other lessons like this, often the hard way. They still had to figure out how to reach the market, how to make solar more affordable and how to keep the costs of the operation low. And they would have to do all this amidst the social and political turmoil sweeping Sri Lanka.

Ultimately, the two founding entrepreneurs dropped out to reduce the cost burden on the business, remaining only as shareholders. The third entrepreneur, who joined in 1988, decided to stay on and take the business forward. He had a marketing background and had now developed considerable know-how in what customers wanted, how to deliver it to them and how to operate in the rural markets. But the business was strapped for cash, and faltering. In line with Schumpeter's emphasis on 'will', he managed to keep the company alive on a shoestring, until, several years later, his business was acquired, and he finally had the resources required to grow. As we will see in Chapter 5, he would go on to have a transformative impact on solar diffusion in Sri Lanka.



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