Disclaimer The designations employed and the presentation of the material in this document do not imply the expression

of any opinion whatsoever on the part of The World Bank Group or The Apex Consulting Group, Catapult Design, Inotek Foundation, or GATD Foundation (collectively the Program Partners). Moreover, any views expressed do not necessarily represent a decision or the stated policy of the World Bank Group or the Program Partners. Any citing of trade names or commercial processes is included for the information of the reader and does not constitute endorsement, recommendation, or favouring by The World Bank Group or the Program Partners. Some information contained in this document is derived from carefully selected public sources that have been deemed to be reasonable and reliable; however The World Bank Group and the Program Partners cannot be responsible for its accuracy or completeness. Any opinions expressed reflect the current judgement of the author and do not necessarily reflect the opinion of The World Bank Group or the Program Partners. All opinions presented are subject to change without notice. This document is provided for informational purposes only, and is not a solicitation of any investment, monetary or otherwise, and should be read in conjunction with additional materials provided by the Program. No representation or warranty, express or implied, is made as to the completeness or accuracy of the information. This document contains forward-looking statements. Such statements are subject to certain risk factors which may cause the concept commercialisation to differ or results to vary from those expected.

Table of Contents
Business Case Section Opportunity Introduction Concept Customer Profile Business Model Pilot Market SWOT Analysis Risks Numbers Way Forward Program Page 1 2 3 5 6 8 9 10 11 13 14

Families and home industries in rural areas mostly use biomass fuel from wood or charcoal for cooking. This current option is easy to obtain and low cost. However, there are major disadvantages from using fire wood, including health hazards, forest degradation, lack of reliability and standardisation in the quality of fuel. The pattern of reliance on fossil fuels and ineffective biomass alternatives can be interrupted by introducing an effective, lower cost, environmentally neutral alternative biomass cooking fuel solution. To respond the current challenges, a concept of alternative biomass cooking fuel from sustainable sources is being designed. The new concept is a sustainable biomass fuel pellet that will offer cleaner biomass fuel as it produces less smoke, and is produced using a more environmentally friendly adhesive technology. The demand for biomass fuel pellets and cook stoves exists in rural locations across Indonesia as rural communities have few appealing options for cooking fuel .

This concept converts organic waste from sustainable wood, palm, or paper manufacturers into efficient and cleaner biomass fuel pellets (with an average caloric value of 4,972 Kcal / Kilo) to be used for cooking fuel by home industry, street food vendors and households using biomass cook stoves. The proposed technology to manufacture biomass pellets uses organic waste from sustainable wood, palm, or paper manufacturers as raw materials. The product is a biomass fuel pellet with consistent heat and higher average caloric value than firewood or conventional wood charcoal. After this biomass fuel pellet has been marketed, theres potential to combine the product with customized biomass stove. This concept offers a solution to provide community scaled conversion of organic waste into fuel through the establishment of a biomass fuel pellet manufacturing and retail chain.

Over 150 million people in Indonesia currently use biomass as a primary source of cooking fuel. This causes approximately 10,000 hectares of forest destruction every year and 15,300 deaths every year from biomass cooking health hazards. The use of fossil fuels such as LPG for cooking is also common in both on- and off-grid areas. A demand has been identified for a sustainable product that provides communities with lower cost, environmental friendly and more efficient biomass cooking fuel. Biomass fuel pellet supply is a viable option to replace the use of firewood, wood charcoal, or other fossil fuels. The market consists of both households and small food processing home industries in rural areas using firewood every day. The option of targeting street food vendors and including cook stoves in the offering are opportunities to accelerate growth of the concepts market share.

The value proposition for the Market Partner(s):

Support to distribute product to new market segments with minimal risk, improved impact potential, and significantly scaled operations to the level of national distribution. Investmen

The total variable cost per kilo of biomass fuel pellets is Rp 1,584 which includes the cost of manufacture, and sales commission. A targeted sales price Rp. 2,800 with a gross profit for each kilogram sold of Rp. 1,216 has been modelled.
Required Investment: Return on Investment: Revenue year 1: Rp 761,300,000

The road from market partner engagement to validated market solution is estimated to take one year consisting of market exploration, concept development, testing and ultimately introduction of the market solution.

27.66 % Rp 3,026,800,000 Rp 1,079,896,000 35.68 %

The value proposition for target community:

Individual households, home industry and street vendors in rural areas across Indonesia will have access to a lower cost, cleaner, safer, more efficient, uniformed biomass cooking fuel available at their local community store.

EBITDA year 1: Profit Margin:

Selected Market Partner(s) will be offered a range of support, assistance and guidance from the Indonesia Demand-Driven Green Innovation Program Partners.

Over the past several months, Program Partners of World Banks Indonesia Demand-Driven Green Innovation Subprogram (IDDGIS) have explored and screened energy related challenges from the target community. These challenges have been narrowed down to the five most pressing energy-related challenges facing the target community. From these five challenges, a number of concepts have been generated to provide solutions to improve conditions for rural Indonesians. Program Partners work to provide specific information and analysis in areas that affect commercial and financial viability as well as the impact potential on the target community. The next stage of the IDDGIS is to source potential Market Partner(s) to support and assist in delivering the most commercially viable concepts to the market. The design concepts are presented to potential Market Partner(s) through this Business Case as well as through the delivery of business presentations. This Business Case seeks to assist potential Market Partner(s) to make an informed decision of whether or not to engage further with the IDDGIS in the commercialization of the technology. Through this Business Case, potential Market Partner(s) will gain an insight into the technical and commercial details of the concept, provide answers to questions such as the concepts target market, where is the concepts target location, what are the characteristics of the ideal Market Partner(s) for implementation of this concept, the commercial viability of the concepts implementation in the target location, what social and environmental benefits are likely to be generated from this concept, and what is the recommended way forward to commercialize the concept.

Each concept in IDDGIS is developed to meet a particular demand that has been identified as a key energy related challenge in the target community. The underlying challenge for this concept was to provide viable systems for community scaled conversion of organic waste into clean and affordable energy fuel. This concept converts organic waste from sustainable wood and paper manufacturers into efficient and cleaner biomass fuel pellets (with an average caloric value of 4,972 Kcal / Kilo to be used for cooking fuel by home industry, street food vendors and households using biomass cook stoves. The option of bundling cook stoves with fuel pellet distribution presents an opportunity for synergies and increased potential for commercial impact. The distribution of fuel pellets will initially be done utilising motorbike sales teams, and trucks can be used for additional supply runs as volumes surpass motorbike capacity. An indicative caloric value comparison of common alternatives follows: Log wood (stacked - air dry): Traditional wood pellets: Concept biomass fuel pellets House charcoal: 15 17 21 27 GJ / Tonne GJ / Tonne GJ / Tonne GJ / Tonne

Our research indicates that the commercialization of this concept will generate the following commercial Benefits for Market Partner/s: Reduced R&D costs for product innovation through program support; Access to expanded retail markets; Reduced cost and risk exposure to generate new sales channels; and Access to local networks and customer channels.

Our research indicates that the introduction of this concept to the market will generate the following value for rural Indonesians: Improves access to a regular, consistent supply of reliable cooking fuel; Provides a comparatively less pollution-generating energy source that is relatively cheaper to wood; Improves worker productivity in home industry operations as fire tendering is not necessary; Improves the cleanliness in villages and hamlets; The burning hours per kilogram of pellets is significantly longer than wood; Higher heat level means time required for cooking is reduced; Pressure on the surrounding forest is reduced; Reduction of workload, mainly for women, in firewood collection and cooking; Reduces cooking fuel expenditure to zero over the long run; Eliminates the dangers of indoor air pollution, increasing productivity and safety; and Provides carbon neutral energy with no new net GHG emissions as it is part of the carbon cycle.

Sustainable Biomass Fuel Pellet Converting organic waste from sustainable wood and paper manufacturers into efficient and cleaner burning wood pellets (with an average caloric value of 4,900) and marketing them as cooking fuel for home industry, street food vendors and households using biomass cook stoves. Once they are marketed a custom pellet stove could also be introduced to maximize efficiency.

The value proposition for the Market Partner(s): Support to distribute product to new market segments with minimal risk, improved impact potential and significantly scaled operations to the level of national distribution. The value proposition for target community: Individual households, home industry and street vendors in rural areas across Indonesia will have access to a lower cost, cleaner, safer, more efficient, uniformed biomass cooking fuel available at their local community store. Commercialisation Strategy The commercialisation strategy for Sustainable Biomass Fuel Pellet is as follows:
Commercial Pillars Market Customers Phase I (Pilot) January to June 2013 - Sleman, Gunung Kidul, Bantul, Kulon Progo in Jogjakarta - Individual households; Home industry; Street food vendors; Local retail outlets - An established manufacturer will engaged to manufacture the product from a centralised facility - The manufacturer will collaborate with sustainable wood and paper manufacturers to obtain raw material inputs - The manufacturer will be required to ensure only waste from sustainable sources is used - The centralised manufacturing facility will distribute to the regional distribution hub and storage facility in Yogyakarta. - Local sales agents will then distribute the product locally to retail sale points (on consignment) and to bulk buyers directly - A local motor bike sales team of four people will be deployed to educate and inform the communities of this product and make direct sales on a commission basis. - Local sales agents will be commissioned to make direct sales to retail and end-user customers such as traditional markets, minimarkets, cooperatives and other retail outlets. - These local outlets and retail partners will be responsible for direct sales in their local communities. - Sales agents will initially be responsible for introducing the product to the market, educating consumers, and engaging potential outlets. - Direct marketing will be used to gain market acceptance through the conduct of outreach events and consumer educating workshops to highlight the superior overall quality and benefits of the product. - Could be also included in the mobile RE shop. - Pellets will be sold in 1kg sacks. - 1kg sack is Rp. 2,800 - Customers will pay cash on delivery for this product. The product is comparatively cheaper than wood therefore no finance support will be required Phase II (Scaling) June 2013 to June 2014 - Kalimantan, Sumatra, NTT, and NTB - Individual households; Home industry; Street food vendors; Local retail outlets; Large Industry; Biomass Power Stations - A decentralised approach to manufacturing will be adopted with new hubs in key regional areas including Mataram, Pekanbaru, and Makassar to service a wider market. - The manufacturer will collaborate with sustainable wood and paper manufacturers and other industries to obtain raw material inputs - The manufacturer will be required to ensure only waste from sustainable sources is used - Explore potential stove manufacturer to bundle the product with biomass fuel pellet sales - Each manufacturing facility will distribute regionally via local sales agents - Local sales agents will distribute the product to retail sale points (on consignment) and to bulk buyers directly - A local motor bike sales team of four people will be deployed to educate and inform the communities of this product and make direct sales on a commission basis for each location. - Local sales agents will be commissioned to make direct sales to retail and end-user customers such as traditional markets, mini-markets, cooperatives and other retail outlets. - These local outlets and retail partners will be responsible for direct sales in their local communities. - Sales agents will initially be responsible for introducing the product to the market, educating consumers, and engaging potential outlets. - Direct marketing will be used to gain market acceptance through the conduct of outreach events and consumer educating workshops to highlight the superior overall quality and benefits of the product. - Piloting to sell bundle product of biomass fuel pellet and its customized biomass cook stove. - Could be also included in the mobile RE shop. - Pellets will be sold in 1kg and 5kg sacks. - 1kg sack is Rp. 2,800 and 5kg sack is Rp. 13,500 - Customers will pay cash on delivery for this product. The product is comparatively cheaper than wood therefore no finance support will be required

Manufacture

Distribution

Sales & Marketing Strategy

Retail Pricing End-User Finance

The Competitive Environment Biomass fuel pellet supply has competition from several substitute products being used by home industries and households in the target area for cooking fuel. Other biomass alternatives exist with natural and biogas also representing competition for the successful concept commercialisation. The alternatives are each represented by a specific group which include: Traditional Firewood: The majority of rural Indonesians use firewood for their daily cooking fuel. End-users in rural areas can collect fire wood and twigs around their community, or alternatively purchase it from local firewood collectors. Charcoal and briquettes: Charcoal and briquettes made from wood, coconut shells, sawdust or other organic waste are being commercialised in the market. There are different types of charcoal and briquettes with different caloric value, but the market price of both charcoal and briquettes is higher than the price of fire wood. These processed alternatives are offered commercially by private companies, and in some cases supported or distributed by the not-for-profit community. Biogas fuel: This technology provides a digester to convert organic waste into cooking fuel. The biogas digester technologies are being offered to the target market by a range of different organizations with different business models and different motives to disseminate their technology such as private companies, NGO, social enterprises, CSR programs, and local government. LPG fuel: The Indonesian government is dedicated to disseminate 3kg LPG gas canisters for Indonesians in an effort to replace the use of kerosene and wood as cooking fuels. LPG gas canisters are a less costly alternative to kerosene. The government owned PT Pertamina has a monopoly in this market; both in production and distribution.

Barriers to Entry The following points create potential barriers to enter for first movers into this market: Communication barriers with the community due to language and culture barriers; Difficulties to change community mindset due to assumed expense and change concerns (e.g. switching cost); Changing community mindset on assumed technology advantages especially in changing rural areas communities to switch from using fire wood; Competition from established alternative solutions providers; Patents of existing wood pellet providers may restrict entry; and Risk of introduction of government operating licensing requirements.

Barriers to entry for subsequent market players include: Identifying a new innovation and solution which is able to make a more attractive offering to the target community; Acquiring target community acceptance for a new biomass cooking fuel provider; Competitive responses from established first movers and alternative solutions providers; Access to optimal distribution channels as potential distributors gain increased bargaining power; and National, provincial, regional or rural government regulations limiting competition and endorsing the first mover.

Indonesia is the national target market for Wood Pellet commercialization. Indonesia is the largest country in SouthEast Asia both in area and in population. It has an estimated population of 237 million of which 28 million live in the metropolitan area of the capital, Jakarta. Indonesia consists of 33 provinces located across 5 major islands and thousands of small islands. The country is an archipelago contains 17,508 islands. The Indonesian economy is the world's sixteenth largest by nominal GDP. Indones ias 2011 GDP is estimated to be USD 845.680 billion with GDP per capita estimated to be USD 3,508. Despite the countrys 6.4% economic growth in 2011, Indonesia still faces unemployment and poverty challenges. In 2011, the poverty rate was estimated to be 13.3% and the unemployment rate 7.9%. The Pilot Market The target community is the community in which the Program is focusing its activities for pilot commercialization. The local communitys participation from this location has been the key to the success of the process so far. After assessing different possible locations, the Special Region of Yogyakarta was selected as the best suited location for pilot commercialization of the concept. The province is located near the southern coast of Java. In 2010 registered population in Special Region of Yogyakarta is 3,452,390 inhabitants. The Special Region of Yogyakarta consists of four districts: 1. Bantul Bantul district consists of 17 sub districts, 75 villages, and 933 hamlets. The total population in 2011 was 1,035,635 inhabitants with total 311,934 people as head of households. Several subdistricts are still in off-grid areas and most rural areas do not have access to Drinking Water Local Company (Perusahaan Air Minum Daerah). Bantul district has six rivers that flow all year long. Industries located in Bantul are typically small industries. In 2010, there were total of 18,146 industries in the area. 2. Gunungkidul Gunungkidul district consists of 18 sub districts, 144 villages, and 1416 hamlets. The total population in 2010 was 674,408 inhabitants. The economy of Gunungkidul Regency is dominated by the agricultural sector. Traditional home craft industry, food processing, and agricultural products are all the sectors with significant potential for further development. 3. Kulon Progo Kulon Progo district consists of 12 sub districts, 87 villages, and 917 hamlets. The population of Kulon Progo is 388,869 people. Majority of inhabitants occupations in Kulon Progo are farmers. Water supply for irrigation in Kulon Progo is taken from Progo and Serang River. 4. Sleman Sleman district consists of 17 sub districts, 86 villages, and 1212 hamlets. The total population in 2011 was 1,125,369 inhabitants with total 305,376 people as head of households. The biggest Sleman inhabitants occupations are in the field of agriculture and services. In 2009, the number of registered small industries is 15,012. In 2009 there were 181 Solar Power Generators, 3 Micro Hydro Power Plants, and 105 livestock waste biogas installations registered in Sleman area.

Sleman

Kulon Progo

Bantul

Gunung Kidul

The proposed biomass fuel pellet is produced using a technology to convert organic waste from sustainable wood or paper manufacturers into cooking fuel. Introduction of a new technology may require a significant amount of consumer education and information to socialise its benefits before meaningful sales will be established. Both biogas and government subsidised LPG represent obstacles in the form of real competition. The current existence of both wood pellets and other biomass alternatives on the market create additional constraints as well as the dependency on access to raw materials. The technology is, however, superior in the most important areas of biomass fuel attributes, and with a large potential market this concept is viable by obtaining sufficient market share. A brief analysis of the concepts existing Strengths, Weaknesses, Opportunities, and Threats as well as Constraints and Dependencies follows below:

Strengths Biomass fuel pellets are consistent in their size and heat level; 3 hours of effective burning time per kg; Biomass fuel pellets produce less hazardous smoke; Using biomass fuel pellets reduces households workload in collecting firewood; Biomass fuel pellets use organic waste from sustainable wood, palm, and paper manufacturers as raw materials; The distribution channels may include rural Indonesian employees; and The model can be expanded to include several regional and national markets. Opportunities Over 150 million people in Indonesia still use biomass as a primary cooking fuel; The need for predictability is an universal consideration for all business owners, including home industries; Reduction of health hazards is important for households where the kitchen is a central part of the living quarters; and The raw materials can be located in the target community and low cost distribution options exist.

Weaknesses Biomass fuel pellet technology and benefits may still be unfamiliar to members of the target community; Biomass fuel pellets must stay dry in order to be effective; Reliance on the motorbike sales team ability to obtain market acceptance; The availability of raw materials may be limited, thus limiting production capacity; Retail price of biomass fuel pellets may appear to have a higher cost when compared to the current alternatives, however because of its efficiency in the end it will provide financial savings; and Some traditional recipes include firewood or charcoal. Threats Competition with biogas systems or other alternative technology of cooking fuel at low cost; Decrease in or lack of purchasing power in the target markets would have significant implications for the success of the commercialisation process; and Some of the raw materials are also being used in other industries in the target location including wood dust for the tobacco industry.

Constraints Some of the traditional cooking methods in the target community rely on firewood or charcoal; The product is entering the market as a subsequent mover; The availability of the raw materials in the target manufacturing location may limit the potential production capacity of the manufacturing facilities; and Government efforts to increase LPG dissemination limits demand growth. Dependencies A steady supply of raw materials including a stable or declining number of companies requiring the same materials from the same suppliers; A stable or improving financial situation for home industries in the target market; Manufacturer ability for to produce the desired features of the product; and The trust and acceptance of the technology and the product from the local communities.

The following is a selection of high-level risks, risk events, and suggested mitigation measures to be considered when a comprehensive risk management plan is developed in relation to the potential commercialization of this concept.
# Risk Categories Technology: risk of technology failure or technological obsolescence Risk Events Proposed adhesive technology failure Caloric value inconsistent Incompatible with stove/customer needs Marketing strategy fails Pricing points exceed purchasing power Local retail refuses to stock product Pressure from current wood suppliers Risk Mitigation Strategy Testing, prototyping for extendable solutions, evaluate multiple options to enable commercialization, implement and operate an active management of obsolescence Identify lessons learned from previous success and research, pilot selected commercial strategies in a contained environment prior to scale-up, Develop contingency plans for key areas of the commercial strategy A Health, Safety and Environment Plan will be developed and implemented (including staff, supplier and contractor training) Required capital will be secured prior to the launching of the pilot, a fraud prevention plan will be developed, multiple finance alternatives will be locked into long-term service contracts; Development of a supply chain risk management plan including the preparation of simulation models with mitigation and impact reduction strategies Qualify local distributors and logistics providers, maximise payloads, use alternative modes of delivery distribution network design, insurance coverage Prepare a business continuity and resiliency plan that documents scenario analysis and impact reduction strategies Emphasizing social mission of the organisation, strict employment screening and Implementing a performance measurement and reporting framework Extensive relationship building with pilot system users, regular evaluation of product value to the community, assessment of the effectiveness of marketing and adjustment as necessary Respectfully engaging with the community, defining mutual expectations and monitoring the their fulfillment Seeking multiple alternative suppliers, locking in major suppliers through long-term service contracts; ensuring all business partners commit to a shared vision and set of values Maximizing first mover advantages through accelerating speed-to-market, utilizing competitive intelligence strategies Frequent and detailed communications with policy makers, regulators, industry bodies, media, consumers, and environmental groups Develop an emergency management and business contingency plan

Business/strategic: risk affecting the viability of the business model and commercial strategy Environmental and Health: risk of damage to the environment or health caused during manufacture or installation and the liability arising from such damage Financial: risk of insufficient access to capital, employee fraud end-user financing failure Manufacture and Supply Chain: risk relating to plant closure, input resources, plant damage, component failure, cost base Distribution: risk of non-delivery, increased logistics costs, transportation related breakage Operational: risk relating to the operational management strategy and implementation People: risk of not attracting sufficiently skilled and experience people with the right attitude who can consistently deliver Demand: risk of not creating sufficient market demand during the pilot phase and beyond Community Acceptance: risk of the community not embracing the offering, business model or local sales representatives Business Partnerships: risk in failure of partnerships between business partners Competition: risk relating to early mover competition in the market Political/regulatory: risk of a change in public energy policy, export/import regulations and business enabling environment Natural Disaster and force majeure: risk of a significant natural disaster in the pilot market location

Emissions exceed expected levels Unknown health risks from product use Clean production not viable Loss of revenue due to theft Insufficient start-up capital Operational capital delays High outstanding debt levels

Unplanned plant closure Significant increase in input costs Availability of supply Logistic supplier is unreliable Trucking accidents Significant increase in distribution costs Severe product failure Stove modifications fail Inability to hire staff as required High staff turnover Staff damage community relations Marketing strategies fail Sufficient demand cannot be created Scale is unachievable Community rejects product offering Community rejects organisation Input suppliers fail or discontinue supply Local distribution partnerships fail Manufacturer discontinues production Competition occurs too quickly Non-Profits undercut pricing model Government restrictions on use/purchase of organic industry waste Flood or fire, earthquake, tsunami or volcanic eruption at the production or customer location

10

11

12 13 14

This following section provides information on the financial viability of the first year of the pilot commercialization. The total variable cost per kilogram of wood pellets is Rp 1,584 which includes the cost of manufacture, and sales commission. A targeted sales price of Rp. 2,800 with a gross profit for each kilogram sold of Rp. 1,216 has been modelled. The manufacturing capacity will achieve 100% capacity by the 4th month of the initial year, sales and production can be increased the following months however it requires additional capital expense. The initial investment of Rp. 761,300,000 will cover the procurement of machinery (Rp. 656,000,000) as well as 6 months of operational costs (Rp.105,300,000) with no sales assumed. At the end of year one, the company will retain 10% of its earnings while the remaining Rp. 971,906,400 will be returned to investors; ensuring investors enjoy a 27.66 % ROI. This also supports the companys sustainability by providing additional operational funds in year two of approximately Rp. 10.8 million. Investment Operational (6 months Covered): Equipment (Production Machinery): Total Required Investment: Repaid to Investors End Y1: Return on Investment: Revenue year 1: EBITDA year 1: Profit Margin:
Monthly Revenue in Million Rupiah 350 300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 Value 173.6 291.2 291.2 291.2 291.2 291.2

Monthly Unit Sales Rp Rp Rp Rp 105,300,000 656,000,000 761,300,000 971,906,400 27.66 %

120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 0 62 83 104 104 104 104 104 104 104 104 104

Rp 3,026,800,000 Rp 1,079,896,000 35.68 %

Risk
Estimated Return on Investment: Estimated Payback Period:

27.66 % One Year

Expenses
4% 5% 0.28% Payroll Operating Utilities & Maintenance Cost of Sales

Monthly Revenue & Expense in Million Rupiah Revenue 350 300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 173.6 Expense

291.2 291.2 291.2 291.2 291.2

91%

Projected P / L Year 1

The World Bank has brought together a team of experts to provide business and design support services to Market Partner(s) to assist them in developing and commercialising compelling product and service concepts. The goal is to offer insights, access to networks, tools, and processes to expedite the commercialisation process. IDDGIS will offer Business Support Services to facilitate the development of connections, investment, planning, and strategy needed to bring successful concepts to market; as well as, Design Services to help develop inspirational, and technically refined concepts tuned to market demands and ready for launch. In return, Market Partner(s) will bring specific industry knowledge and business resources to the table allowing us to jointly create products and services that are not only financially viable but good for communities and the people that live in them.

Stage

Identification and engagement of Market Partner(s) Potential Market Partner(s) identification Engaging most suitable partners Market Partner(s) meet with the Program Partners Commercialisation process is mapped out Developed Business Cases Innovation capability Strategy development and business planning Compelling initial business plan Demonstrated core technologies and/or product prototype Market Partner(s) selected and engaged

Concept development, testing, and prototyping Further concept development Testing of concept design Prototyping (if necessary) Several iterations to prepare concept for marketability. Seed funding Focus on cost, value and pricing Learning orientation and flexibility Innovation capability Refined business model, technologies, product Validation of viability and scalability Indication of customer demand

Activities

Market research, business consulting, and feasibility study Conduct of a feasibility study Business Support to Market Partner(s) Market research assistance Joint marketing effort by the Program Partners and the Market Partner(s). Marketing strategy and execution Supply chain design and implementation Funds for market trials, marketing, and refinement Feasibility Study Market Research Strong customer awareness and demand Effective supply chain

Validation of the Market Solution and Market Solution development, testing, and adjusting to market research Market Partner(s) empowerment Maximised impact on the challenges Direct improvement of lives of the target communities Risk management Formalisation of impact standards and expectations Stakeholder Management Funds to support scaling Fully validated and customised Market Solutions Sustainably reaching target communities impacted

Inputs

Outcomes

The Indonesia Demand-Driven Green Innovation Subprogram (IDDGIS) supports pro-poor clean energy innovation by facilitating the generation and market deployment of new business models, products and services. Its objective is to help the private sector identify and exploit opportunities for clean energy innovation. IDDGIS is executed by a core team of local and international private sector and non-profit implementing partners. IDDGIS is funded by the World Bank Group, the Asia Sustainable and Alternative Energy Subprogram, and the Norwegian Trust Fund for Private Sector and Infrastructure. It is implemented by The Apex Consulting Group as Market Facilitator and Program Coordinator, Catapult Design as Global Design Partner, INOTEK Foundation as Local Design Partner, and GATD as Mentor-Gatekeeper. The focus of the IDDGIS is to serve the clean energy needs of poor communities in Indonesia. This is achieved by identifying needs, generating promising concepts, and designing new products and services in partnership with market partners. IDDGIS is organised as a tournament whereby market ideas compete for successive rounds of deeper and broader support. Ideas that do not receive sufficient market buy-in are progressively screened out of IDDGIS. This ensures that minimal time and resources are spent on working on prototypes that will never be commercialised. The IDDGIS has six stages, and begins by identifying a target community to work with. This is followed by identifying critical clean energy needs that are prospective market opportunities. Needs are identified through a call for challenges campaign, through field research and through stakeholder workshops. Promising initial concepts are then systematically developed through iterative rounds of design, prototyping and testing before they culminate into market-ready offerings. Once the product/service is market ready it must be implemented, a process that involves manufacturing, distribution chains, infrastructure creation. Only when the product or service is available commercially on the market is it considered commercialised. IDDGIS approach to clean energy innovation involves the development of product and service solutions using human-centred design methods. In addition to relying on in-house teams, IDDGIS engages the community for which it is designing in the process of creation. As the solution progresses, IDDGIS also involves local Market Partner(s) in the refinement of the design relying on them for the full implementation of a commercialised product or service. More information about IDDGIS and the Program Partners can be found at: www.greeninnovation.or.id

www.worldbank.org

www.apex-cg.com

www.catapultdesign.org

www.inotek.org

www.gatd.org