Voices From Emerging Markets: Innovative Electricity Generation in Rural India

By Rama Siva in India

I have been in rural Eastern India for the past few weeks in villages that have had no electricity for most of its history. Then about 2 years ago, Husk Power Systems(www.huskpowersystems.com) came on the scene with small scale power plants that create electricity from rice husk. The changes in the villages since the coming of electricity have been enormous.

The technology of gasification and power generation is many decades old. So why is it that these and thousands of other villages rich in agricultural waste are yet to be electrified? The answer may lie in the challenges of operating such a set up in a sustainable way in a rural setting. It is tough to find and train operators from the village level labor pool. The costs have to be kept well within the ability of the local consumers to pay for it. Even when the price is reasonable, it is a huge effort to get the consumers to pay regularly month after month.

Husk Power Systems is active on the field finding solutions to some of these challenges. Rich in venture capital funding and grants from the likes of Shell Foundation, they plan to set up 60 of these power plants in 2010 reaching a quarter of a million people in India. This is technology from early 20th century being harnessed on a large scale with 21st century management tools.

Building Roads and Opportunities in Rural Consumer Markets

Efforts to strengthen national road networks got a boost recently with announcements on new highway construction in China and India. These developments highlight attempts to ease transportation bottlenecks and spread the fruits of economic growth to areas that have not always benefited from it. In India's case, the expansion of highways is aimed at alleviating the congestion that many observers say is holding it back from reaching its potential. In China, the activity is part of a massive economic stimulus as well as a way to tie outlying (and restive) areas more firmly to the economic heartland.

Infrastructure improvements- in roads, rails, ports and airports- across rural areas of the developing world are increasingly providing access to more than 3 billion rural consumers. National highways, such as China's "Mother Road" and India's "Golden Quadrilateral", are opening new markets and spurring the development of small towns along their length. Some countries, such as South Africa, already have good roads in rural areas because of the legacy of colonialism and resource extraction. While income differences between rural and urban areas are significant (in China, rural income is estimated at about a fifth of the urban incomes), many rural consumers benefit from remittances sent by urban-dwelling relatives and are hungry for consumer goods and services. And, as accessibility to rural areas increases, so will rural income.

Many MNCs focus on consumer markets in cities, rather than rural areas, of the developing world because of urban wealth and accessibility. But, it is also worthwhile to track the physical infrastructure- both planned and existing- in developing countries as an early indicator of new and untapped markets. Since setting up business in these areas takes time, making concrete strategies for moving into rural markets sooner rather than later can give forward-thinking firms a first-mover advantage.

Netbooks: Emerging market entry-level technology or Western fashion accessory?

by Brendan Smith

A recent article in Business Mirror notes that Intel is getting ready to release a new version of its low-cost Atom processor, and with this version it's hoping to hit the market it was targeting in the first place: emerging market consumers buying their first computer. The company had originally thought that the chip, which allows PC manufacturers to sell laptops for less than $500 in most instances, would appeal most to people in fast-developing economies like China and India. Instead, it has been Western consumers who have taken to netbooks as a second computer, drawn not only by their low price but by their small dimensions, low weight and snappy looks.

The new version of Atom is designed to use less power and be capable of enduring the more extreme conditions present in many developing countries, including hotter climates and the dust that often wrecks electronic devices in rural areas. Intel believes that many consumers in developing countries have shunned netbooks because of doubts about their durability, and the new power-sipping Atom is designed to eliminate the need for a fan, allowing the computers to be sealed and preventing dust contamination.

While improving the durability of hardware is critical, there may be other reasons that developing country consumers, especially in rural areas, have hesitated to buy netbooks. As their name implies, netbooks are designed primarily to leverage the power of the Internet, and many residents of developing countries lack reliable connectivity, particularly in rural areas. The growing popularity of netbooks and "nettops" means that device makers have to figure out ways to provide reliable connections for these units. Hardware makers are in talks with mobile carriers on deals to provide customers with free or subsidized netbooks or nettops in return for a long-term contract, as is done with mobile phones. These models, which have been attempted in the U.S. and elsewhere, may boost the uptake of netbooks by essentially allowing consumers to buy netbooks and Internet service in installments. Hardware companies and mobile Internet providers that can devise compelling value propositions for developing world consumers may be well-positioned to capitalize on the next wave of Internet adoption.