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After-sales Service and Local Presence: Key Factors for Solar Energy Innovations Diffusion in Developing Countries

In this study, we have investigated the practice of an international network of companies and organizations which are engaged in the diffusion of solar home systems in Africa and Asia. This research looks into a network called, "StS Network for Rural Development" (www.solar-federation.org) in Ethiopia.

To investigate the details of the network, local business managers and governmental officers were interviewed. Our case study explored that the network (registered first as NGO in Ethiopia through its Stiftung Solarenergie - Solar Energy Foundation) has managed to surpass other companies and even MNCs for its relatively unique approach aimed at the diffusion of rural solar home systems in Ethiopia. Furthermore, it is identified why the NGO has managed to diffuse relatively larger volume of solar energy innovations than other competitors, which is mainly related to its effort of building trust among the local community through its after-sales service and local solar centers. This case study would provide both policy makers and business managers with practical implications.

 

Unique approach of Stiftung Solarenergie

The approach of Stiftung Solarenergie - Solar Energy Foundation (SEF) , first through donation and pilot projects, and later turning into solar business through its affiliate business units (solar centers) is unique in that donation alone is not sustainable and the rural marketis untapped market if support institutions are in place.

As per our close investigation, SEF has got unique positions in at least three different market networks as discussed below.

  • Supplier –User network

    SEF has got its solar center established and serving inside the community. They promote, sell, install, and provide maintenance service living within the community. The provision of such service has provided confidence to the local users as they get in touch with a closely available and accountable body for their bought product/service. SEF, having hands on both side of the supply chain, can address the demand of the rural market. It has got a company supplying the technology and it has got solar centers “listening to the demand”.

  • International- Local network

    SEF gets its main solar technology supply from Europe and Asia while it also owns a local assembly plant in Ethiopia. The international-local network of SEF stretching from Europe down to the rural villages in Ethiopia might have uniquely contributed to its relative success in Ethiopia, while both “pure” local or “pure” foreign companies and organizations could find it challenging to address the market. SEF in this perspective as a network of many international companies and organizations including donors could be in a unique position in the solar market in Ethiopia.

  • NGO-Private network

    SEF has got a social capital due to its unique nature as an NGO backed by international network of business companies and organizations. The connection it has had and its unique position working both as NGO (including through donation) and partnering with its “daughter companies” might have also contributed for having the higher share of solar innovations diffusion in Ethiopia. As neither “pure” NGOs nor “pure” companies could not address the rural SHS market in Ethiopia in a full-fledged manner, this “hybrid” nature of SEF might be the other uniqueness and back up for its relative success.

    In general, the intention here is not to hastily conclude that SEF or its alikes are the only ones to address the SHS market but to support our argument that local presence and after sales service might require networking and addressing the supply chain comprehensively.

 

Conclusion

The discussion on the practice of Stiftung Solarenergie - Solar Energy Foundation (SEF) in Ethiopia may shed more light on the nature of partnership and strategy required to have a wider diffusion of rural energy innovations through local presence and provision of after-sales service to the rural community. Large multinational companies and organizations have limited access to their end clients in the developing world, which in turn affects the development and diffusion of technologies in this potential market. Hence, partnership with the local firms (organizations) that can easily access the rural community could be a better way to go for rather than establishing a (sales) branch in the cities which often stays far from the rural users. Local government and policy makers, in this regard, may also have to give due attention to the availability of effective after-sales delivery as equal as their attention to the provision of physical products through bulk purchase such as in government procurement mentioned in our case, Ethiopia.

 

Download the full study here.

 

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