Indonesia Harmony

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Executive Summary

BP Alternative Energy & Mercy Corps have been cooperating on the ground in Indonesia since late 2007 to assess the economic viability of starting a renewable fuel and cook-stove business to alleviate energy poverty among millions of emerging consumers. This initiative, modeled after BP India’s successful entry into this field, will rapidly move from market assessment to commercial pilot.

BP will act as the supply and technology provider for both the stove and the renewable fuel (cook-stove is composed of a clean, safe and affordable stainless steel smokeless stove and low cost biomass pellets made from otherwise discarded agricultural residues), and Mercy Corps Indonesia will manage the last mile to the consumer (import initially, distribution, sales & training). In addition to the immediate opportunity to sell fuel efficient, low pollution stoves meaning the low income house-holds are saving much needed money, the physical network of micro-entrepreneurs being created will become increasingly valuable to Mercy Corps for promoting future services and products (e.g. micro-credit, micro-insurance, medicines &/or public health messages and information services).

Business Problem

Millions of Indonesians are energy poor. For those who can afford fuel, kerosene is the available option and it is costly. For others, the search for firewood is the only available option and it is both time-consuming and an unstable source of energy. Both kerosene and firewood are bad for the environment, and the firewood option is leading to further deforestation issues.

Pilot Approach

  • Proprietary bio-mass pellets and cook-stoves, manufactured by BP’s alternative energy group, have been successful in India, with plans to expand to China and Vietnam. This pilot program expects to prove the market in Indonesia as well.
  • Utilizing existing warung infrastructure within Indonesia, a 6 month pilot is in place in 4 markets to prove the larger market within Indonesia. The pilot will focus on learning:
    • Price points
    • Marketing strategies
    • Distribution logistics

Goals and Success Metrics

  • Pilot Goals
    • Prepare to scale in Q2 ’09 to 105,000 homes by end of 2010 by learning the right price points, marketing and distribution strategies
    • Reduction in deforestation by encouraging sustainable use of natural resources
    • Displace the use of greenhouse emitting fuels
  • Pilot Success Metrics
    • For 200 households, a weekly expenditure cost savings of 2%-11%
    • Increase in warung income. Exact ranges to be an outcome of the pilot
    • Job Creation: potential for each warung to hire 1 person for sales and distribution during the pilot.
    • Prove the model for Indonesia

Scaling Potential

  • In the first two years, reach 105,000 households
  • 1500 micro-enterprise owners making an additional $300/year
  • 15,000 farmers earning additional income from residue agricultural biomass
  • Reduction in carbon emissions of 100,000 tons

Budget

The total budget for the program is $30,000.