As a member of the community, the franchisee is well positioned to know when to offer credit and when to withhold it depending on local conditions. It’s a shared service so it doesn’t require a large expenditure from any one customer and with an attentive franchisee it’s easy to temporarily or permanently withhold the service if the customer is unable to pay. The service, in this case power generation, can start small and grow with the community. Once the initial startup costs are applied they can be returned and reused after the franchisee starts collecting customer payments. It makes good use of development funds because it’s a profit-making activity, at least for the franchisee. The franchise model can leverage a standardized business plan to spread rapidly over a wide area. The franchisee is someone from the community willing to learn and work hard in return for a profit. In this case, the franchisor can be a company, an NGO or even a central power authority. The franchisor packages the service in a way that’s easy to understand, provides training and equipment, but depends on the franchisee to hustle sales of the service in return for the bulk of the profits. That spirit can be applied to the power problem if a complex technology can be simplified enough to be sold and maintained by people without an engineering degree, people who understand the needs of their community and, critically, their ability to pay. Capitalism, of a sort, thrives in even the poorest communities as people make a living buying and selling goods. Old-fashioned capitalism can be a great motivator. Microgrids provide local control and independence from an unreliable central source but need to be maintained by someone with the appropriate skills and motivation. Similarly the small, dedicated systems deliver little power and can potentially trap people in a debt cycle. The kiosk idea serves an immediate need and solves the cost issue for the poorest customers but doesn’t deliver enough power to push economic development. In many impoverished places there is an uncomfortable race between the expanding grid and an expanding population. Central grids plan to reach everyone eventually but at a potentially high cost in CO2 emissions and not in the time frame that people need. Reducing emissions from electric power sector.Įxisting approaches to providing power to the developing world all contain elements of a solution but have problems and limitations. Prototype the hardware and training in our own neighborhoods and businesses. Provide the seed capital and business expertise to launch the franchisors in various countries.Ĥ. Create training materials that enable people with limited educations to deploy and maintain small-scale power systems.ģ. Reduce the cost of equipment such as inverters and management systems that are not already on the steep cost reduction curves that PV cells and batteries are by open sourcing the designs and software.Ģ. How can the MIT community and alumni help make this model work globally?ġ. The franchisee is profit motivated to keep the system running and is better positioned to understand what the customers need and can afford. A business model that addresses these issues is the franchise model in which a local entrepreneur acquires training and standardized technology from a franchisor and sells the resulting power to the community. Many companies have been formed to sell small PV systems to individual consumers but these systems are expensive relative to what the consumers can afford and force them into debt to purchase them. When systems are gifted without someone local to maintain them, they often fall into disrepair and disuse. Many different deployment models are being explored. Microgrids based on PV, wind or pico-hydro sources solve these distribution problems, but have their own problems with cost and reliability. Distribution lines to reach them are expensive, subject to significant losses and vulnerable to power theft and terrorist disruption. Communities that do not already have power are often small and remote. Many groups have recognized that a decentralized grid with small-scale generation close to the point of use makes more sense than trying to extend centralized grids. The challenge is to provide power based on renewable sources to some of the world’s poorest people. Deploy microgrids to the developing world using a franchise business model based on open source hardware to reduce cost.
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