Business Model

Overview

Energy development in poor areas generally follows one of two extreme paths.  First is the capitalist path, where private enterprise in entrusted to deliver energy services to the people.  The theory goes that the efficiency advantages inherent in private enterprise over government enterprise will lead to better services for more people.  In practice however, there is a fundamental conflict between private enterprise’s motive to maximize profit for its owners, and the government’s stated public objective of providing basic services to all citizens.  History has shown that private enterprise habitually fails to bring energy services to those most in need, who represent a small, sparse market with a limited ability to pay.  By doing so, private enterprise often further marginalizes these poor segments of the population, lowering their chances of receiving future infrastructure improvements and social program implementation.

Second is the traditional charity path, where products and services are given away to those in need.  This approach rarely focuses on long-term capacity building and cost recovery and generally fails to achieve a sense of project ownership on the part of the beneficiaries.  While charities generally have the best of intentions, they often lack the necessary technical knowledge and permanent presence to establish long-term operation and maintenance plans.

In order to create real and lasting solutions to the energy needs of the poor, blueEnergy implements a hybrid business model that combines a charitable social vision of serving the poor with the technical and business sense of for-profit enterprise.  Sustainable revenue streams outside of public charity, such as commercial sales of energy systems, leasing of energy systems, community battery charging fees, project consulting fees, and government contracts, are identified and captured.  These proceeds are then used to further develop local capacity and to cover some costs for the most marginalized communities.

Service Models

blueEnergy implements a variety of service models, that can be characterized with the following variables:

1) Location: Core vs. Local vs. Remote

Physical location of the energy system.  Core means on-site at blueEnergy’s core facilities (which right now are located on the IPCC-INATEC campus in Bluefields, Nicaragua); local means within close proximity to blueEnergy’s core facilities.  At the moment this mean the city of Bluefields and its close surroundings; Remote means anywhere that is difficult to access and which is beyond the ability of blueEnergy to operate the system based out its core facility.

2) Interest Served: Public vs. Private

Whether the system serves a public interest, such as a school, clinic, or government building, or whether it serves a private interest such as a home.  blueEnergy does not fund private interest energy services although it does develop them and will implement them on a fee basis.

3) Ownership: blueEnergy vs. Public vs. Private

Whether the system is owned by blueEnergy, a public institution, or a private person or institution.

4) Management: blueEnergy vs. Public vs. Private

Whether the system is operated by blueEnergy, a public institution, or a private person or institution.

5) Energy System Configuration: Fixed vs. Dynamic

Whether the system is configured to charge a fixed battery bank or whether it has docking stations to charge a dynamic set of batteries.

Each combination of these characteristics describes an energy service model that requires a unique set of social institutions, operation and maintenance plans, and financing mechanisms.  Each of these models has advantages and disadvantages over the other models, and blueEnergy works with its constituents to select the most appropriate one for each situation.

Revenue Streams

As mentioned previously, the different service models implemented by blueEnergy employ different financing mechanisms.  Some of blueEnergy’s projects, such as delivering energy services to a local, privately-owned business, are structured to achieve greater than full cost recovery from the project beneficiary, while others, such as delivering energy services to a remote, public school, are structured to achieve only partial cost recovery from the beneficiary, with the losses being supported by public sector granting agencies (ie. foundations, governments, membership clubs, etc.), private sector granting agencies (corporations), and private donors.  This diversity of revenue streams ensures that blueEnergy can address the energy needs of the most marginalized people while not relying solely on the public’s good will to support its work.