Building Business Cases to Reach Scale: A study on biomass cookstove business models from Asia and Africa

Submitted by Maud Bernisson | published 21st Jan 2015 | last updated 15th Jun 2018
fp

In 2014, 2.5 billion people relied on biomass to cook and heat their home. Worldwide, initiatives have been developed to produce and spread improved biomass cookstoves. These little and simple devices can help the poorest to have access to a cleaner and more efficient energy that reduces health risks, helps mitigate climate change and improves livelihoods.

Today, businesses that develop these type of stoves experience difficulties because their main funding source, namely Carbon Finance, is slowing down. Thus, to propose solutions for these businesses, a study has been out: “Building Business Cases to Reach Scale: A study on biomass cookstove business models from Asia and Africa”.

How does it relate to adaptation to climate change?

Poor people in many rural areas highly rely on land, forests and clean water to live. This is the reason why adaptation is a very important aspect of development as the poor communities are highly vulnerable to changes in their environment. It then becomes key to tackle adaptation from a livelihoods perspective. 

The adoption of holistic approaches that encompass both mitigation and adaptation benefits has a lot to offer. For example, the use of improved cooking stoves in developing country contexts has the potential to improve livelihoods by helping mitigate climate change, increase the adaptive capacity and reduce vulnerability at the very local scale.

Some of the known benefits from the use of more efficient cooking stoves in developing country contexts include: health improvements at the household level and reduced indoor pollution; potential for the development of local industry and an additional source of income at the local level; reduced burden for women as potentially less time is used to collect firewood in the forests; contribution to clean development, and a potential reduction of deforestation by providing sustainable household energy supply in certain rural areas. In this article, the author proposes business models for improved biomass cookstoves based on evidence from Africa and Asia.

The study

To find tracks to develop their activities and to provide a clear, concise and accurate understanding of the business model to investors and funders, GIZ HERA and StovePlus – 2 organizations that used to work on the field in this sector for decades - have worked together during one year to study in-depth 8 cookstoves business models across Asia and Africa: Cambodia, Bangladesh, India, Kenya, Ghana, Burkina Faso where the well-known organizations work on the topic for years.

The study was carried out by Sandra Romero Ruiz, Independent Consultant in Agriculture and Environment, Elisha Moore-Delate, Cookstove Specialist, Tina Marie Marchand, StovePlus Research and Advocacy Officer, and Windbaley Savadogo, Business Specialist and Independent Advisor.

With 100 in-person interviews, direct field observations, focus groups and two regional workshops (Phnom Penh, Cambodia and Accra, Ghana), researchers were able to gather a large amount of firsthand data and recommendations.

Key results

From these data, they highlighted evidences which show the importance of investing directly in stove value chains, especially at the production level (e.g. on training, tools & equipment for stove producers). Quality control through stove standards, labels and certifications, as well as public awareness efforts were also identified key areas to invest in.

Market maturity was found to be a very important factor in considering where, when and how to invest in a cookstove business. For example, raising awareness on improved cookstoves is an essential activity for successful stove dissemination and those entering immature markets invest heavily in this area, both in terms of time and resources. Comparatively, stove businesses entering a more mature market tend to focus their investments on product development, standardization and marketing.

A variety of financing mechanisms were seen, such as Official Development Assistance (ODA), private loans, carbon finance, awards, etc. And carbon finance played a very important role in the ability to scale-up cookstove businesses.

Thus, the access to finance is still vital for the development of cookstove businesses and the sector, and direct investments into cookstove value chains have made stoves more accessible to end users. However, the study also explores the very interesting case of Cookswell Jiko; a cookstove business that was able to reach scale without any financial assistance.

Finally, it’s important to highlight that despite a shift towards more market-led approaches, donors are still very relevant and have an important role to play in the development of the cookstove sector. In particular, market actors are calling upon development agencies and governments to lead large-scale, national level awareness raising efforts on the impacts associated with inefficient cooking, in particular the adverse effects of Indoor Air Pollution (IAP) on human health.

Further resources

Explore the cases and increase your knowledge on cookstove business models!

Read the study here on issuu.com 

Access PDF here

Read more about StovePlus

Read more about Improved Cookstoves