It’s not surprising that a company liked Greenhouse Holdings, which builds eco-friendly infrastructure, would have a thriving California-based operation.  But as John Galt, the company’s executive chairman and founder, told Renewable Energy World magazine, the company is not just focusing on wealthy enclaves to grow its business. Greenhouse Holdings sees opportunity in poor countries, where little energy infrastructure exists, and is entering these markets ahead of the competition.  “We’ve found a niche,” he said.

A recent paper by Clean Energy Group shows that nations like Africa and India serve not only as strong niche markets, but also as incubators to drive down technology costs. Once the prices come down, the technologies can expand into the developed world, opening the way for green energy to at last be fully cost competitive against the entrenched energy infrastructure.

Clean Energy Group explains that this is “reverse innovation,” a term coined by Jeffrey Immelt, General Electric’s CEO and Tuck Business School at Dartmouth in a Harvard Business Review article. It describes the path of not only energy technologies, but other advanced products as well.

“This trend is far removed from purely academic theory. Rather, it is an operating strategy for major global corporations doing business in the developing world, with implications for how climate technology could develop. Put simply, reverse innovation means designing, creating, and manufacturing a product in a developing country. The product may initially be designed to meet developing world demands for lower cost, but  global companies now use this ‘bottom of the pyramid’ market strategy to create products that are later exported to the developed world,” said the CEG paper, Moving Climate Innovation into the 21st Century: Emerging Lessons f...e.

GE’s cheap ($15,000) PC-based ultrasound machine is cited as an example. The company developed the medical device for use in China’s rural outposts where there was no conventional hospital ultrasound. Now the cheaper alternative has made its way to the developed world.

It may seem counter-intuitive but the conditions are often better for scaling up new technologies in poor countries than in rich nations, says the paper.  Here’s why: there is no competition.  Clean tech innovators in the third world are not, for example, trying to make inroads against cheap coal-fired electricity. They are simply providing electricity where there is none; they are filling a market need.

This fits in with the way disruptive technologies often emerge, according to Harvard Business School Professor Clayton Christensen. In the paper, Winning and Losing Bets on Green Technologies, he and co-authors say: “In contrast to wealthy nations where consumption of electricity and gasoline is ubiquitous, developing nations are an ideal place to commercialize green energy technologies. In these countries, there is so much non-consumption that green technologies need only be better than the alternative: nothing.”

In emerging economies, clean energy helps people better accomplish a job they are trying to do. For example, in Africa it’s better to charge your cell phone from a solar panel in your village than be forced to travel hours to the nearest city. In the West, this convenience is readily available through a vast, cheap and easily accessible grid, which is why government intervention is needed to integrate green energy into wealthy countries, the paper says.

The Obama administration is increasing support to US companies that want to export into these emerging niche markets. More details are here.

Elisa Wood has been writing about energy for more than 20 years. See more of her work at www.RealEnergyWriters.com.

Views: 38

Comment

You need to be a member of Home Energy Pros to add comments!

Join Home Energy Pros

Featured Forum Discussions

Lighting replacement - 300 watt LED flood light

Started by Mary Sinkler in General Forum. Last reply by Dennis Heidner 6 hours ago. 2 Replies

Glass Block Windows

Started by Ken Kalke in Best Practices. Last reply by Sean Lintow Sr on Saturday. 1 Reply

What's the Most Profitable HVAC Job for Your Company?

Started by Wayne Melancon in HVAC. Last reply by Ken Kalke on Friday. 1 Reply

EZ Green Home is Hiring!

Started by Chloe Chapman in General Forum Jan 5. 0 Replies

Videos

  • Add Videos
  • View All

Latest Activity

Dennis Heidner replied to Mary Sinkler's discussion Lighting replacement - 300 watt LED flood light
"Have you looked how much light you need in the backyard and where you need the light?  Often a…"
6 hours ago
Nate Adams liked tedkidd's discussion Home Performance is Failing - let's turn that around?
10 hours ago
Nate Adams replied to tedkidd's discussion Home Performance is Failing - let's turn that around?
"Ira, you're not alone. Here in Cleveland the gas company uses their own auditors, it killed…"
10 hours ago
Nate Adams replied to tedkidd's discussion Home Performance is Failing - let's turn that around?
"Website is finally up, albeit still imperfect. You can check out the very detailed case studies.…"
10 hours ago
Paul Mausteller liked Bruce Fillmore's photo
11 hours ago
tedkidd replied to tedkidd's discussion Home Performance is Failing - let's turn that around?
"Thank you Ira! We need more stories like yours to hold the evidence of harm to the faces of…"
11 hours ago
Profile IconPaul Mausteller, Mark Freeman and Bruce Fillmore joined Home Energy Pros
11 hours ago
Ira Eisenstein replied to tedkidd's discussion Home Performance is Failing - let's turn that around?
"I have been a home inspector since 2003 and evolved into energy related issues and became a home…"
14 hours ago

Home Energy Pros

Welcome to Home Energy Pros – the unique digital community by and for those who work in the home energy performance arena.

Home Energy Pros was founded by the developers of Home Energy Saver Pro (supported by the U.S. Department of Energy) and brought to you in partnership with Home Energy magazine.  Home Energy Pros is sponsored by the Better Buildings Residential Network. Please honor our Guidelines

© 2017   Created by Lawrence Berkeley National Laboratory.   Powered by

Badges  |  Report an Issue  |  Terms of Service