Page 3 - Supply-side Financing of Improved Biomass Cookstoves in India
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Discussion Paper
government, non-government, and private actors exchanging would continue to be essential for the success of cookstove
resources and sharing capacities for dissemination of stoves. business programmes and have raised questions on reducing
However, the Indian cookstoves market has witnessed piece- or removing such support.12 Even today, the cookstove
meal approaches to disseminate stoves through government markets in India are nascent and disorganized, owing to
charities or NGO-led action, failing to address the needs low awareness levels, poor infrastructure, socio-cultural
and concerns of diverse actors of the stove supply chain.9 problems in adoption, and improper coordination between
These efforts have paid insufficient attention to sustainability market actors. Failure of government programmes and lack
and scalability of the action, resulting in fragmented markets of a robust cookstoves market has resulted in an unpropitious
overtly dependent on external support. Despite the potentially scenario for penetration of cookstoves in rural households,
significant health and environmental benefits of programmes which continues to be abysmally low. The unenviable track
to disseminate ICS in India, such programmes have struggled record of past government and charitable interventions has
to make an impact. In the past, a concerted effort by the given rise to an increased focus on commercial and market-
government, NGOs, and private firms attempted to distribute driven solutions. Only recently have multilateral agencies
ICS across India. However, the results of such programmes and other donors appreciated the need for both upstream
have been discouraging, with low usage rates and uncertain (manufacturer to end-user) and downstream (end-user to
durability of disseminated stoves.10 Small entrepreneurs and manufacturer) support to various actors in the improved
other actors (NGOs) involved in this programme lacked the cookstove value chain13 (see Figure 3).
scale or the investment capacity to meet the magnitude of the
problem. Some of these lessons were incorporated in new Improved Cookstoves: Supply-side Financial Institutions
government initiatives like the National Biomass Cookstoves
Initiative and the National Clean Energy Fund. Donors in Owing to poor demand for ICS among rural users in India,
India have perceptibly shifted to a commercial enterprise- most of the cookstove dissemination programmes adopt a
based dissemination mechanism, which arguably presents an supply ‘push’ strategy as opposed to a demand ‘pull’ approach.
opportunity to create cookstove business models of scales However, cookstove suppliers are geographically dispersed
that can match the scale of the problem.11 However, Bailis and and heterogeneous groups of manufacturers and vendors, who
co-workers have cautioned that state and/or donor support are too disorganized to be addressed by a ‘blanket’ strategy.
While certain established cookstove suppliers have had the
Testing R&D & Warehouse Marketing Awareness
support from finance for facility support generation;
government production
loan
Technology Manufacturer Distributor Retailer End user
developer
Commercial End user Awareness
loans loans generation
Testing and Financial Institutions End user
technology Government NGO subsidies
standardization
Support across supply chain Bilateral/Multilateral organizations Support across supply chain
Figure 3: A typical cookstove supply chain, with nature of external support required for each actor
MAY 2015 3
government, non-government, and private actors exchanging would continue to be essential for the success of cookstove
resources and sharing capacities for dissemination of stoves. business programmes and have raised questions on reducing
However, the Indian cookstoves market has witnessed piece- or removing such support.12 Even today, the cookstove
meal approaches to disseminate stoves through government markets in India are nascent and disorganized, owing to
charities or NGO-led action, failing to address the needs low awareness levels, poor infrastructure, socio-cultural
and concerns of diverse actors of the stove supply chain.9 problems in adoption, and improper coordination between
These efforts have paid insufficient attention to sustainability market actors. Failure of government programmes and lack
and scalability of the action, resulting in fragmented markets of a robust cookstoves market has resulted in an unpropitious
overtly dependent on external support. Despite the potentially scenario for penetration of cookstoves in rural households,
significant health and environmental benefits of programmes which continues to be abysmally low. The unenviable track
to disseminate ICS in India, such programmes have struggled record of past government and charitable interventions has
to make an impact. In the past, a concerted effort by the given rise to an increased focus on commercial and market-
government, NGOs, and private firms attempted to distribute driven solutions. Only recently have multilateral agencies
ICS across India. However, the results of such programmes and other donors appreciated the need for both upstream
have been discouraging, with low usage rates and uncertain (manufacturer to end-user) and downstream (end-user to
durability of disseminated stoves.10 Small entrepreneurs and manufacturer) support to various actors in the improved
other actors (NGOs) involved in this programme lacked the cookstove value chain13 (see Figure 3).
scale or the investment capacity to meet the magnitude of the
problem. Some of these lessons were incorporated in new Improved Cookstoves: Supply-side Financial Institutions
government initiatives like the National Biomass Cookstoves
Initiative and the National Clean Energy Fund. Donors in Owing to poor demand for ICS among rural users in India,
India have perceptibly shifted to a commercial enterprise- most of the cookstove dissemination programmes adopt a
based dissemination mechanism, which arguably presents an supply ‘push’ strategy as opposed to a demand ‘pull’ approach.
opportunity to create cookstove business models of scales However, cookstove suppliers are geographically dispersed
that can match the scale of the problem.11 However, Bailis and and heterogeneous groups of manufacturers and vendors, who
co-workers have cautioned that state and/or donor support are too disorganized to be addressed by a ‘blanket’ strategy.
While certain established cookstove suppliers have had the
Testing R&D & Warehouse Marketing Awareness
support from finance for facility support generation;
government production
loan
Technology Manufacturer Distributor Retailer End user
developer
Commercial End user Awareness
loans loans generation
Testing and Financial Institutions End user
technology Government NGO subsidies
standardization
Support across supply chain Bilateral/Multilateral organizations Support across supply chain
Figure 3: A typical cookstove supply chain, with nature of external support required for each actor
MAY 2015 3
