Author Archives: arun paul

An excellent discussion on distributed solar energy by leading players of the solar industry from California. It was attended by various players in the solar supply chain: Dow Chemicals (manufacturer), Solar city (installers and financiers), 1BOG (certifying agency for installers) and PG&E (California utility company). Together they talked about new evolving business model for distributed solar energy and how is it attracting more and more customers.

Traditionally, the utilities have good expertise in providing reliable power supply to customers, but they are not good at launching new business models or innovative technologies. Against the popular notion, PG&E has taken revolutionary steps to promote solar energy among its customers. Apart from Feed-In-Tariff, they have also launched Virtual Net Metering system to increase the solar adoption among the customers. While Feed-In-Tariff serves only customers who own a house, Virtual Net Metering is designed to help tenants staying on rent. With solar adoption increasing, PG&E will soon face voltage fluctuation issues in the future. Currently, the grid is equipped with transformers to handle voltage fluctuation. The Holy Grail for PG&E, or for any utility for that matter, is to design a cost effective energy storage mechanism to handle the solar feeding systems more efficiently.

According to the McKinsey cost abatement curve, switching to green energy at home is a cost effective way to reduce emissions and is captured in the lowest part of the abatement curve. Still the customers are hesitant to adopt green technologies, as the initial costs are too high. It was claimed that distributed solar energy is good for the society as 1KWH of solar energy produced at home is cheaper than industrially produced solar energy, after including all costs and transmission leakage. Companies such as SolarCity provide financial and technical services for solar installations and make solar more attractive to uninitiated customers. Where as, 1BOG have come up with an innovative business model to group purchase solar and pass on value to customers.

Another good news from solar industry is that Dow Chemicals is scheduled to release their solar shingles in 2011. This will cater to the customers who care about their home aesthetics while switching to solar.

What does the future of social entrepreneurship looks like? The era of non-profit ventures is soon going to end. Only economically and socially profitable organizations are going to stay around and make a significant impact in the society. That was the message given out by the panel on The Future of Social Entrepreneurship, attended by representatives from leading impact investors: Skoll Foundation, Ashoka and New Profit Inc.

All these investors maintain an impressive portfolio of investments around the world in areas of education, public health, environment and workforce development. They shared insights on the criteria they use to choose social ventures. Only those ventures that have a validated business model – in contemporary business terms, the ventures that crossed the chasm – are selected for investment. Just like any other early stage start-up venture, social ventures too have to bootstrap themselves until they demonstrate profitability.

Why is profitability so important? Profitability is necessary for the organization to make a significant impact on the society, by sustaining itself on the long run and spreading its reach to a wider population base. Most often, the organizations fail to become economically profitable because they don’t know how to monetize the social value that they create. Monetization and securitization of social value are the vital steps towards profitability. This is where most of the social ventures lack expertise and where business professionals can fit in.