<div dir="ltr">Dear Paul:<br><br>Thank you. It has to be more than "paying the bills". There has to be a "smell of success"; as Oli of Eco-Zoom put it at the webinar, 35+% gross profit margin. <br><br>And that is at the retail level. A retailer has to worry about inventory and the ability to vary prices, depending on the location - 50+% margin on "new models", only 15% margin on "old models" for clearance. Offering multiple technologies - solar-charged batteries and appliances (small lanterns to DC televisions or low-head water pumps), biomass stoves for different fuels and sizes - makes this inventorying and pricing enormously challenging, <br><br>And that is at the "city" - capital, district HQ - level. How the product and after-sales service can reach village populations that are reachable by road and some local final retailer exists. (India LPG has this problem, which is why Kirk Smith writes off some 50 million households after Prime Minister Modi's current promises of granting "connections" but reducing subsidies are met. <br><br>I remember throughout my life that kerosene lanterns were sold in "cities" - state capitals in India or national capitals I started wandering to some 25 years ago - and kerosene was delivered to distant shops and then by bicycle or handcarts or on foot. <br><br>Efforts to start and run "energy stores" have floundered in India (a few going on still), and trying to sell solar lanters or cookstoves, clay coolers, via large supermarket chains. <br><br>++++++++++<br><br>I have observed some 25+ years of these difficulties. A mass market for new energy technology products at the bottom of the pyramid households seems impossible except for gas and electric appliances. <br><br>What then is the alternative? <br><br>FWIW, my thought is: a) market to the bankable non-household customers (and middle-income households, of course) for any range of energy services, including cooking services (Anil's idea of rural restaurants and to me, generally, "outsourcing the kitchen") ; and b) once such a technology demonstration has been made and the products turned into "aspirational" items for the less fortunate, try expanding to that. <br><br>Who would do this and how? Entrepreneurs with local knowledge, skills and capital base. Even so, there are many "pre-conditions" - infrastructure services, skill-base, social stability and openness to new business or new ways of doing business - that appear necessary. What can be done in some parts of India may be unthinkable in other parts of India. <div><br>If interested, there should be a thread on this "Challenge to Biomass Stoves Community" by Kirk Smith. What will it take, short of governments-driven highly subsidized distribution, to reach the 500 million? <br><br><br>Nikhil</div></div><div class="gmail_extra"><br clear="all"><div><div class="gmail_signature" data-smartmail="gmail_signature"><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><font face="georgia, serif">------------------------------------------------------------------------<br>Nikhil Desai</font></div><div><span style="font-family:georgia,serif;font-size:small">(US +1) 202 568 5831</span><font face="georgia, serif"><br><i>Skype: nikhildesai888</i><br></font><br></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div>
<br><div class="gmail_quote">On Sun, Sep 10, 2017 at 9:28 AM, Paul Anderson <span dir="ltr"><<a href="mailto:psanders@ilstu.edu" target="_blank">psanders@ilstu.edu</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
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Dear Nikhil,<br>
<br>
Your reply is thoughtful and informative (at least it is to me). <br>
<br>
Economics terminolgy: "Supplier finance is critical from
manufacturing to distribution/after-sales service,"<br>
If the suppliers (including the person who supplied the sales work)
are not paid sufficiently, the system will break down (eventually,
if not soon). So, "paying all the bills" is ultimately the name of
the game of success.<br>
<br>
I am interested in carbon offsets for paying the bills. And that is
a crucial "demand" issue. ("Supply" will follow demand, in this
case.) And demand for carbon credits is very much "in the eye of
the beholder." <br>
<br>
The financial part of the TLUD stove situation (IMO) keeps coming
back to the value of carbon offsets generated. But it is too
thinly related to the purpose of the Stoves Listserv. So I will
send ANOTHER message about this. <br>
<br>
(I will stay active on the Stoves Listserv, but not about carbon
finance issues of stoves -- except to give appropriate updates, if
with merit. And I will post appropriate messages about stoves and
carbon in the EPosts section of my website <a href="http://drtlud.com" target="_blank">drtlud.com</a> )<span class=""><br>
<br>
Paul<br>
<pre class="m_2277295564789740452moz-signature" cols="72">Doc / Dr TLUD / Prof. Paul S. Anderson, PhD
Email: <a class="m_2277295564789740452moz-txt-link-abbreviated" href="mailto:psanders@ilstu.edu" target="_blank">psanders@ilstu.edu</a>
Skype: paultlud Phone: <a href="tel:(309)%20452-7072" value="+13094527072" target="_blank">+1-309-452-7072</a>
Website: <a class="m_2277295564789740452moz-txt-link-abbreviated" href="http://www.drtlud.com" target="_blank">www.drtlud.com</a></pre>
</span><span class=""><div class="m_2277295564789740452moz-cite-prefix">On 9/9/2017 4:40 PM, Nikhil Desai
wrote:<br>
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<div dir="ltr">Paul: <br>
<br>
I have had some experience with the use and abuse of terms
"market-based" and "results-based" in the aid business.
"Market-based" does not exclude taxes and subsidies; in
fact, it is a code word for using taxes and subsidies rather
than command-and-control. Sometimes the costs are hidden;
e.g., it takes money and skills to administer taxes and
subsidies. Hence my distress. <br>
<br>
"Results" have become quite a fad in the last 20 years --
output, outcome, and identification of "benefits" are all
buzzwords on which a small cottage industry burns inferior
data fuel in inefficient models to produce intellectual
smoke. So long as the donor and the donnee agree which
expert to put in charge of Monitoring and Evaluation
(M&E) and get the desired ratings on the project, career
promotions are guaranteed all around. Those who ask
questions are thrown out. <br>
<br>
1. Reliable, efficient last mile distribution chains to poor
households are difficult to develop. I can write many
personal stories on these. Micro-finance for the users is
not the answer; too high-cost. Supplier finance is critical
from manufacturing to distribution/after-sales service, and
that is not easy. Several things have to just "go right" in
the procurement, inventory, and human resources chains. <br>
<br>
2. Massive free or near-free distribution is indeed a good
idea, provided the upper and middle classes are taken care
of first and weaned off subsidies. This is being done with
the Indian LPG scheme. though I am skeptical that Kirk
Smith's dream of "complete and permanent transition". Not
only are the costs too high, I support a Woman's Right to
Choose (stacking). And even then the subsidy burden is high
and not transparent. (There is GOI subsidy under Direct
Benefit Transfer L(?) or DBTL and on top of it there is a
product-based "unrecovered loss" for public sector oil
companies. It is complicated) Distribution to the poorest
who don't have permanent homes, and/or collect woodwaste and
such, or don't even have food to cook or time to cook, is a
serious problem. <br>
<br>
Yes, these two problems limit effective, quick action to
reach the poor (esp. those who are remote and whose
income/cooking is not regular). <br>
<br>
Please do keep at these questions. I haven't yet found a
sure-fire alternative, or rather, it takes enormous
knowledge-base and TLC to foster entrepreneurship among the
poor that leverages local knowledge and capital (financial,
human, physical) in order to develop successful technology
innovators. (I would be happy to converse about this on the
phone.) <br>
<br>
Like many others in such business, I have some fantasies on
how small-scale local businesses can be fostered with a
combination of subsidies, knowledge intermediation, to build
transformative biomass supply and use industries. But I
haven't yet figured out how to do this on a large enough
scale for the "stoves" projects. Definition of economic and
agro/animal/forest contexts is key. <br>
<br>
Nikhil<br>
<br>
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