The paradox of mini-grid business models: A conflict between business viability and customer affordability in rural India

Abstract

Policy-makers struggle with the following wicked problem in the energy access context: if existing socio-technical solutions can alleviate energy poverty, why is the energy transition slower than expected in rural Bottom of the Pyramid (BoP) markets? Here, social enterprises are starting to play a vital role. Using Husk Power Systems (HPS) as a longitudinal case study, we analyse how a social enterprise in India attempts to serve low-income customers. In this study, we aim to address the following research question: how and to what extent can a mini-grid based social enterprise resolve the technical and organisational challenges associated with providing services in a rural BoP environment? Our interdisciplinary approach navigates the landscape between social entrepreneurship and socio-technical aspects of mini-grid operations in the rural BoP market using a Multi-Level Perspective (MLP). We rely on narrative analysis to delineate the complexities of mini-grid operations in low-income settings to integrate on-site experiences and firm-level processes to energy access discourse. The paper argues that continuous conflicts exist between social and commercial objectives concerning the socio-technical configuration of mini-grids in the rural BoP markets. As this case study reveals, social enterprises need to manage the socio-technical complexities inherent to mini-grid processes; otherwise, customer affordability and business viability become an unsolvable paradox. The sustainability of a business model depends on how socio-technical aspects of the mini-grid are designed, managed and operated. Finally, this study proposes a business model framework integrating social and technical aspects employing socio-technical regimes in the MLP.