Sunlabob Renewable Energy: Solar power for Laos and beyond

• Main Authors: CHIDAMBARAM, Ravi, DULA, Christopher
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: Laos; Myanmar; Social enterprise; business model innovation; finance; infrastructure development; economic development; distributed solar power; renewable energy; partnerships; internationalisation; market entry; entrepreneurship; social investment; venture capital; Asian Studies; Business Law, Public Responsibility, and Ethics; Corporate Finance; Entrepreneurial and Small Business Operations; International Business; Nonprofit Administration and Management
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/121; https://cmp.smu.edu.sg/case/2951
• Institution: Singapore Management University

Sunlabob Renewable Energy is a registered Laos-based enterprise established in 2001. For the first six to seven years, the business was entirely focused on Laos. The company operated through an innovative business model that used various financing schemes to provide electricity services to the rural poor, who were not connected to the grid. Sunlabob accomplished this by either operating as an independent power producer (IPP), wherein the company produced electricity and sold it directly to consumers or to a utility, or by providing equipment and services to franchisees that then, in turn, operated as micro-utilities within their rural communities. In the case of franchisees, Sunlabob would rent or sell equipment (such as solar home systems and solar-powered lantern charging stations), procure materials, provide maintenance and installation training and help setup the business for the franchisee to operate off-grid electricity services. The trouble with this model is that it requires considerable up-front capital investment to electrify a rural, often remote community. And since energy tariffs are relatively much lower and marginal to the investment, it would take a long time to recover the up-front capital. There were also frequent difficulties in collecting all, or even some, of the end-user payments. These logistical difficulties, as well as the political, legal and regulatory environment in Laos, made it extremely difficult to attract capital. Andy Schroeter, the CEO and founder of the company, began looking for parallel opportunities in government and donor-funded projects in Laos to offset these challenges. This approach has eventually helped stabilise Sunlabob’s revenue stream, but as the country has become more electrified, prospects for new projects have become scarce. New opportunities, he realised, lay further afield. By 2014 Sunlabob had won numerous international tenders from multilateral agencies like the United Nations and World Bank. Now recognised as a leader in rural electrification, Schroeter wants to position Sunlabob to compete in one of the most challenging, yet potentially lucrative, markets for rural electrification: Myanmar. He wonders, is Sunlabob ready? This case can be used in undergraduate and graduate classes, as well as executive education. Students will be able to understand concepts related to social entrepreneurship, analyse the trade-off between social and financial goals and understand the challenges and formulate a strategy of growth for social enterprises.