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| | | style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color: rgb(0, 0, 0);"><span style="font-size: 90%;">'''[[SPIS Toolbox - Decide on market potential|►Go to the Next Chapter]]'''</span></span> | | | style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color: rgb(0, 0, 0);"><span style="font-size: 90%;">'''[[SPIS Toolbox - Decide on market potential|►Go to the Next Chapter]]'''</span></span> |
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| | === '''<span style="color: rgb(135, 150, 55);">3. Evaluate the Business Environment</span>''' === | | === '''<span style="color: rgb(135, 150, 55);">3. Evaluate the Business Environment</span>''' === |
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| | While adoption of SPIS within a region may be feasible from a geophysical perspective, the operative business environment plays a key role in the actual uptake of the technology. There are various factors that contribute to an enabling environment for the adoption of SPIS, and whose significance varies with the entity promoting SPIS adoption. The 9 parameters presented in this chapter are seen to play the most significant role. | | While adoption of SPIS within a region may be feasible from a geophysical perspective, the operative business environment plays a key role in the actual uptake of the technology. There are various factors that contribute to an enabling environment for the adoption of SPIS, and whose significance varies with the entity promoting SPIS adoption. The 9 parameters presented in this chapter are seen to play the most significant role. |
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| − | [[SPIS_Toolbox_-_Government_Interventions|3.1 Government Interventions]]
| + | The 9 parameters are as follows: |
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| − | [[SPIS_Toolbox_-_Development_Organization_Interventions|3.2 Development Organization Interventions]]<br/>
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| − | === '''<span style="color:#879637;">Availability And Cost of Alternvative Fuels</span>''' ===
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| − | The economic viability of SPIS within a region may be affected by the availability and cost of alternative fuels. In most cases for the same size of pump, SPIS normally require higher initial capital investment as compared to either diesel or grid-electricity powered pumps. However, the latter two have life-cycle fuel costs while SPIS does not hence the need to evaluate the life-cycle fuel savings and payback periods of SPIS within the target market.<br/>
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| − | <u>'''An availability assessment'''</u>should determine the quantity and quality of alternative fuels for water pumping. For instance, if a country or region is exploiting fossil fuels, it is likely that fossil fuel based power will compete favourably against solar. For electricity, the rural electrification rate can help to determine the availability of electricity for pumping. Holding other factors constant, the more electrified a rural area is (where most farming is carried out), the higher the likelihood that a notable proportion of the population will use electricity for pumping. The cost and quality of the electricity, however, are among the factors that affect actual use of electricity for irrigation. For instance, there might be high penetration rates but frequent outages, that make electricity unreliable, present an opportunity for SPIS.<br/>
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| − | In some regions, wind can also be seen as a competing resource for irrigation pumping. Some studies have shown that wind applicability and economic viability of wind competes with solar power at speeds greater than 8 m/s.<br/>
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| − | In addition to the financing considerations presented in the previous section, the cost of alternative fuels may have a significant effect on the potential of SPIS within a market. One way to conduct a cost assessment of available fuels is to standardize the unit of measure– determine the per unit market prices (cost / kWh) of the competing fuels in the market. This allows estimation of the amount of fuel needed for a specific pump size, and consequently the cost to power the pump. It is often observed that the lower the costs of alternative fuel compared to the capital investment of acquiring SPIS, the less the market potential of SPIS.
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| − | ==== '''<span style="color:#879637;">Outcome/Product</span>''' ====
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| − | *Availability of alternative fuels in the region or country<br/>
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| − | *Cost analysis per unit of the alternatives
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| − | ==== '''<span style="color:#879637;">Data Requirement</span>''' ====
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| − | *Data on energy resources in the country<br/>
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| − | *Per unit market prices of diesel, petrol<br/>
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| − | *Market prices of electricity per kwh<br/>
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| − | *Electrification rate in rural areas<br/>
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| − | *Quality of electricity in the rural areas
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| − | ==== '''<span style="color:#879637;">People/Stakeholders</span>''' ====
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| − | *Government agencies in energy
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| − | ==== '''<span style="color:#879637;">Important Issues</span>''' ====
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| − | *It is important to determine if there are any government subsidies offered to the alternative fuels presented. These may be a deterrent to uptake SPIS in the country or region.
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| − | === '''<span style="color:#879637;">Technical Capacity</span>''' ===
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| − | A successful intervention to promote and upscale adoption of SPIS would require the technical capacity for solar solution providers to design, implement and maintain the systems. Lack of such capacity makes it difficult to sustain the SPIS market in the country or region. The availability of this capacity is especially crucial at the infancy stages of a market – this is the time when end users are introduced to the technology and when first impressions are critical to long-term adoption. As an example, poor installations leading to frequent SPIS breakdowns and lack of timely repairs on SPIS may result in a negative attitude towards SPIS by end users, limiting the market potential for SPIS.<br/>
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| − | Technical capacity evaluates the availability of skilled personnel for the installation and maintenance of SPIS. It may be inferred from:<br/>
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| − | #Availability of training courses on solar systems;<br/>
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| − | #Number of accredited institutions offering solar courses and;<br/>
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| − | #Licensing of solar technicians.<br/>
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| − | In addition to the presence of skilled technicians, the presence of a licensing and regulating body for SPIS practitioners is key. Licensing indicates the existence of standards of professionalism and a regulator for the market. For instance, the energy regulator in Kenya – Energy Regulatory Commission (ERC) – registers all solar practitioners who have to adhere to a certain code of conduct and standards. It also maintains a members database that acts as a pool for obtaining qualified technicians for installation and maintenance of solar PV systems.
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| − | ==== '''<span style="color:#879637;">Outcome/Product</span>''' ====
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| − | *Assessment of level of skilled capacity in the country/region
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| − | ==== '''<span style="color:#879637;">Data Requirement</span>''' ====
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| − | *List of solar training institutes and courses<br/>
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| − | *List of licensed technicians
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| − | ==== '''<span style="color:#879637;">People/Stakeholders</span>''' ====
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| − | *Energy agencies
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| − | === '''<span style="color:#879637;">Awareness of Solar PV Technology</span>''' ===
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| − | General awareness of solar technologies (solar lighting and solar water heating) and irrigation systems, mainly pumps, may be indicative of a population’s willingness to adopt similar technologies. The converse is also likely - lack of knowledge and information about solar technologies can pose a barrier to public discussion and decision making on the use of solar as an alternative energy solution. By way of example, high levels of awareness among end-users about the benefits, long-term costs and payback periods, and performance of solar lighting compared to use of alternative fuels for lighting (e.g. kerosene) can act as an enabler in the adoption of SPIS. Lack of exposure to real-life solar PV installations, on the other hand, is likely to lead to low confidence in new solar technologies.<br/>
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| − | Awareness of solar PV technologies may also affect the public’s access to market based financing. For instance, financial service providers who are not well-versed with SPIS and its related benefits may be hesitant in disbursing loans for their acquisition, and where loans are available, they may be under limiting conditions (e.g. high-interest rates). This hinders the technology adoption due to lack of financing for the high capital costs associated with SPIS.<br/>
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| − | The level of awareness of SPIS in a region or country can be deduced from various factors including:<br/>
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| − | #'''Trends in the adoption of irrigation pumps:''' Presence of suppliers and distributors of global brands of irrigation pumps and their associated spare parts may be considered a key indicator of market potential. This is especially relevant for SPIS suppliers where presence and growth rate of competitors may be indicative of the markets appetite for SPIS.
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| − | #'''The percentage of solar energy in a country’s energy mix:''' A significant proportion of solar power may be indicating of an enabling environment for the adoption of solar PV technologies.
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| − | #'''Solar PV adoption trends''' over a period of time, say 5 years can be assessed to determine uptake of the technology in the country/region.
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| − | ==== '''<span style="color:#879637;">Outcome/Product</span>''' ====
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| − | *Assessment of awareness level of the country/region
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| − | ==== '''<span style="color:#879637;">Data Requirement</span>''' ====
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| − | *Trends in solar technology adoption<br/>
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| − | *Number of distributors and suppliers of global brands of irrigation pumps<br/>
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| − | *Number and distributors of global brands of solar equipment<br/>
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| − | *Solar energy proportion to the country’s energy mix
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| − | ==== '''<span style="color:#879637;">People/Stakeholders</span>''' ====
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| − | *Government bodies in energy and trade<br/>
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| − | *Research institutions
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| − | === '''<span style="color:#879637;">Significance of Agriculture in the Local Economy</span>''' ===
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| − | This parameter examines the contribution of agriculture to a target area’s economy. Relevant indicators would include:<br/>
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| − | #'''Proportion of the population engaged in agriculture''' – the higher the proportion of the population practicing agriculture, the higher the probability of good market potential for SPIS. This is because there is a higher population that may be seeking to ensure their water security for farming. Also, there is a higher probability of favorable government and non-governmental interventions to ensure employment opportunities within the sector.<br/>
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| − | #'''Existing irrigation culture''' – practice of irrigation farming that is mostly powered through fossil fuels and electricity presents a ready market to shift to solar energy.<br/>
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| − | #'''Proportion of the GDP attributed to agriculture''' – regions with a significant proportion of GDP attributed to agriculture are likely to offer an attractive market for SPIS as agriculture would be an established economic driver. It is, however, important to take note of the main crops or livestock contributing to the GDP. For example, coffee and tea could be significant contributors but these do not present obvious avenues for SPIS uptake. This could be contrasted to the export of horticultural products (e.g. flowers and vegetables) which are water intensive and therefore ready markets for SPIS.
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| − | ==== '''<span style="color:#879637;">Outcome/Product</span>''' ====
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| − | *Contribution of agriculture to the GDP
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| − | ==== '''<span style="color:#879637;">Data Requirement</span>''' ====
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| − | *GDP figures<br/>
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| − | *Agricultural output numbers<br/>
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| − | *FAOstats
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| − | ==== '''<span style="color:#879637;">People/Stakeholders</span>''' ====
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| − | *Government ministries in agriculture
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| − | ==== '''<span style="color:#879637;">Important Issues</span>''' ====
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| − | *Although the economic contribution of agriculture to a country’s GDP may be steadily declining it may be in sight of the country's broad-based economic growth and agriculture may still be the broadest economic sector in terms of demographics, and plays a significant role in the nation’s overall socio-economic fabric.<br/>
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| − | *In addition to agriculture‘s contribution to the GDP, the type and method of agricultural practice should be assessed. Areas that practice irrigated farming would be more ideal markets for SPIS.
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| − | === '''<span style="color:#879637;">Land Access and Tenure</span>''' ===
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| − | is an agribusiness, land is at its foundation and it is therefore important to determine land rights, land access and land tenure terms in an area under assessment. Therefore, it is key for an area to have a pragmatic land policy environment. A desirable land policy is one that has emphasis on land access and development, secure property rights, is backed by reliable information and has clear permitting processes. A proper land policy has the land administration services including surveys and mapping, land use planning, rural and urban development, housing and market information service providers well established. Paucity of information about the laws, procedures and/or information required to safely and legally complete land and real estate transactions creates uncertainty and discourages investments.<br/>
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| − | Land access is defined by the availability of land with the required security of ownership, desirable physical and economic attributes and level of transparency and fairness in transactions.<br/>
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| − | Land tenure is the institutional structure that determines the political, economic and social framework by which individuals and groups secure access to land and associated resources. The absence of reliable information to guide rapidly expanding land market is, by far, the most persistent bottleneck undermining long-term development in most countries.<br/>
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| − | Clear tenure rights are an important consideration when investing into SPIS. Not only do they provide investment security, but may also serve as collateral when applying for loans. For some countries, there are clear demarcations between commercial land (with fixed title deeds) and communal lands (with only informal land use rights and agricultural practices limited to subsistence farming).
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| − | ==== '''<span style="color:#879637;">Outcome/Product</span>''' ====
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| − | *Country land ownership patterns and statistics
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| − | ==== '''<span style="color:#879637;">Data Requirement</span>''' ====
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| − | *Land access and tenure rights in the country
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| − | ==== '''<span style="color:#879637;">People/Stakeholders</span>''' ====
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| − | *Government Ministries especially that of land
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| − | === '''<span style="color:#879637;">Transport and Communication Infrastructure</span>''' ===
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| − | Infrastructure is an organizational system of resources that is needed for a society or business to run. Transportation infrastructure such as roads, harbours, airports and rail, and telecommunication infrastructure are physical systems that are needed for efficient operations within a country or region.<br/>
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| − | Transport infrastructure determines the ease of movement of goods and people. Lack of transportation infrastructure (e.g in deep rural areas and islands) can have significant cost impacts - inefficient transport systems make it difficult to obtain inputs and to deliver products to customers affecting scalability and quality of services. For SPIS market potential, good transport infrastructure would mean reduced costs of system installation as well as easier access to skilled labour for installation and maintenance. Additionally, lower transportation costs could lead to better allocation of funds in running businesses and ease of access to new markets. Good physical connectivity in the urban and rural areas is therefore essential for SPIS users.<br/>
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| − | Communication infrastructure (especially mobile phone connectivity) would be relevant to SPIS as indicative of access to mobile banking in rural areas and implementing monitoring devices in SPIS. Mobile phone use can also be used as a proxy indicator for income levels. Mobile phone usage in rural areas also shows the users can access services such as agricultural information and financial services such as mobile remittances and loans.
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| − | ==== '''<span style="color:#879637;">Outcome/Product</span>''' ====
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| − | *Assessment of transport and communication infrastructure
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| − | ==== '''<span style="color:#879637;">Data Requirement</span>''' ====
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| − | *Data on transport network especially roads in rural areas<br/>
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| − | *Data on mobile penetration particularly in rural areas
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| − | ==== '''<span style="color:#879637;">People/Stakeholders</span>''' ====
| + | '''[[SPIS Toolbox - Government Interventions|3.1 Government Interventions]]'''<br/> |
| | + | '''[[SPIS Toolbox - Development Organization Interventions|3.2 Development Organization Interventions]]'''<br/> |
| | + | '''[[SPIS Toolbox - Financing|3.3 Financing]]'''<br/> |
| | + | '''[[SPIS Toolbox - Availability And Cost of Alternative Fuels|3.4 Availability and Cost of Alternative Fuels]]'''<br/> |
| | + | '''[[SPIS Toolbox - Technical Capacity|3.5 Technical Capacity]]'''<br/> |
| | + | '''[[SPIS Toolbox - Awareness of Solar PV Technology|3.6 Awareness of Solar PV Technology]]'''<br/> |
| | + | '''[[SPIS Toolbox - Significance of Agriculture in the Local Economy|3.7 Significance of Agriculture in the Local Economy]]'''<br/> |
| | + | '''[[SPIS Toolbox - Land Access and Tenure|3.8 Land Access and Tenure]]'''<br/> |
| | + | '''[[SPIS_Toolbox_-_Transport_and_Communication_Infrastructure|3.9 Transport and Communication Infrastructure]]'''<br/> |
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| − | *Government ministry of transport and communication<br/>
| + | {{SPIS Reference}} |
| − | *World Bank ease of doing business report
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