Glossary

Glossary

Term Description
1. DRE enterprise

For the purpose of this tool, a DRE enterprise is defined as one or more of the following:

  • A for-profit, market-driven business providing energy access to the unserved and underserved populations
  • An organization providing products or solutions that generate electricity locally for lighting or livelihood purposes
  • DRE enterprises may include Manufacturers, Importer-Distributors, Wholesalers, Retailers, Installers & service contractors, and Generators & distributors. Some enterprises may cover more than one of these; others may just focus on one element
2. Resource/ Technology

Refers to the renewable energy source utilized by an enterprise for electricity generation and includes solar, wind, hydro or biomass.

3. Solutions

Refers to the products or services offered by an off-grid enterprise. For the purposes of this tool, solutions comprise of solar lanterns, home lighting systems, cookstoves, solar pumps, solar/ wind/ hydro/ biomass based mini and micro grids that may or may not be grid compatible.

4. External Environment

Comprises all external factors that cannot be controlled by the enterprise, but nonetheless affect the operations of any business. It includes political risks, geographic risks and target market risks which have a bearing on business performance

  • Political risks: The risk of doing business in a state is measured by assessing the state government's support to businesses, the region’s political stability and regulatory policies for renewable and off-grid businesses.
  • Target Market risks: Assessment of the socio-economic scenario of the target geographies and evaluating the consumers’ willingness to pay for DRE products/ solutions.
  • Geographic risks: The topographical location of the target market defines the level of demand as well as existing infrastructure support.
5. Off-grid space related risks

Evaluation of attractiveness of investing in the DRE sector over other industries, comparison of generation potential and costs of various renewable energy resources and assessment of repayment risk and threat of grid penetration.

  • Riskiness of investing in the sector: evaluated to help financing institutions compare the various sectors before making an investment decision. The sector-wise Gross Value Added (GVA) is used an indicator of sector attractiveness/ riskiness
  • Technology risk: The potential for different energy resources coupled with their unit cost of generation is used as an indicator of the overall riskiness of the resource against the other available options
  • Solution risk: Depending upon the type of products/ solutions offered by an enterprise, assessment of risk related to grid penetration is included as it may or may not act as a threat to the off-grid enterprise. In addition, the level of competition as well as payback time for the solutions has also been assumed to indicate risk related to a given solution type.
6. Enterprise Performance Risk

Evaluation of the business model, financial, operational and impact performance of the enterprise over the last 3 years.

7. Industry Benchmarks

The tool provides industry level benchmarks to help financing institutions compare the performance of an enterprise against the aggregated industry performance and also assists enterprises in comparing own performance against the industry peers. The industry benchmarks are categorized by business model types - capital expenditure heavy or operating expenditure heavy, as well as by the number of years an enterprise has been in business.

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