Thousands of villages across Pakistan still lack access to piped gas and electricity supplied from the national grid. Based on government’s statistics, around three fourth of the households across the country are estimated to have no access to piped gas and about 30 percent are still not connected to the electric grid.
To meet their cooking, heating and lighting needs, these household either rely upon traditional energy sources like wood or alternatives available in the market like stoves that run on kerosene oil or liquified natural gas cylinders.
These energy sources come with health hazards for immediate users and environmental concerns for the region. More than 100,000 people die every year in Pakistan from air pollution alone, according to Global Alliance for Clean Cookstoves.
A whole new sector of social enterprises is emerging in the country to cater to this segment of energy consumers that are not served by national electric and gas utilities.
Harness Energy, founded by Muhammad Shehryar, a Fulbright alumnus, is one such initiative. “I strongly believe in the power of business to tackle poverty. Harness Energy views even the poorest of the poor as long-term customers,” he says.
Shehryar’s company is currently offering two products – solar-powered lights and fan. Solar light, or lanterns, come in two models – Uno 50 and L1 – and account for for the bulk of their sales.
The starting price of the solar light is $9 and that of the fan is $30. Both products are verified by Lighting Global – World Bank Group’s platform to support sustainable growth of international off-grid solar market.”This is why our prices are higher than those of Chinese solar products available in the market. But we offer a replacement warranty for up to two years after the purchase,” Shehryar says.
Harness Energy is also pilot-testing a couple of high-capacity solar home systems that can run multiple lights and fans for 8-12 hours on a single charge. “If all goes well, we will be launching a high-quality SHS very soon,” he says.
The company is active in Lahore, Chakwal, Khushab, and Layyah districts of Punjab. By 2020, it plans to extend operations to three more districts in Punjab and some talukas in northern Sindh. “Our goal is to impact over one million lives by 2020,” Shehryar says.
Other than solar energy solutions, Shehryar and his team are also working on marketing clean cookstoves. Harness Energy is the first Pakistani company to be awarded the D-prize, an international initiative to facilitate poverty-alleviation interventions. It is using the seed money on a project to market 500 clean stoves in the pilot phase. The company is exploring partnerships with grocery stores, construction material vendors and micro finance banks for the purpose.
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Shehryar says the company has received positive response from customers, especially from women. However, he adds, there remain two challenges in expanding the market for clean energy products. Most of the customers are price sensitive and there aren’t many options for consumer financing for this segment. “Since price is an important factor in the purchasing decision, customers are often hesitant in buying our products. So we have to work extensively on behavior change campaigns to convince them about the medium and long-term benefits of clean energy products,” he says.
One way out can be the option of financing, whereby, customers can pay using 3-6 month installment plans. “But we are not a financing company ourselves so we will have to rely on local organizations and partnerships with micro-finance institutions and banks,” Shehryar says.
However, microfinance institutions lack an extensive network of branches that can cover remote areas not catered to by national electric and gas utilities. Moreover, under the State Bank of Pakistan regulations, they cannot do branchless lending either. “This makes it difficult for our potential customers to avail financing options,” Shehryar says.
Against this backdrop, the company is focusing on community outreach to build a customer’s base. “We take our current customers on door-to-door visits with us. This is helping us gain trust of prospective customers,” he says.
Regarding government support, Shehryar notes that solar products have been exempted from taxes and duties but similar support hasn’t yet been offered for initiatives promoting clean solutions for cooking needs of off-grid population.
Saadia Qayyum is a public policy graduate from Harvard Kennedy School of Government. She has over four years of experience in the energy sector of Pakistan and is presently working on issues of energy access and energy efficiency with UNDP Pakistan. She has consulted for USAID where she advised Ministry of Water and Power, Planning Commission and National Transmission and Despatch Company on energy reforms.