ThisseriesonInclusiveInnovationsexploresbusinessmodelsthatimprovethelivesofthoselivinginextremepoverty.EditorsareElaineTinsleyandCristinaNavaretteMoreno.ResearchedanddevelopedbyEndevaandAshleyInsight.

Profile:ClaroEnergyIncreasingagriculturalproductivityinIndiawithsolar-poweredmobilewaterpumpsChallengeIndia’s rural population highly depends on agriculture,which, given the erratic nature of themonsoon, dependslargely on groundwater irrigation. Lacking access to gridpower,manyfarmersinremoteareasrelyondieselpumps.A less expensive formof power for irrigationwould allowthemtokeepmoreof theirearnings,with lessdamage totheenvironment.InnovationClaroEnergy(www.claroenergy.in/)offerssolar-poweredwaterpumpingsolutionstomeetirrigationanddrinkingwaterneedsinoff-gridruralareas.The0.5–10horsepowersystemsaresuitableforallirrigationneeds,includingflood,sprinkler,anddripirrigation,aswellasforliftingwaterfromcanals.Thepumpscanalsobeusedtochargecellphones.Althoughtheinitialoutlayishigh,solarpumpsaremuchmoreeconomicalthandieselpumpsoverthelongterm.Theyprovidecleanandcontinuouspowerandentailalmostnooperatingcost.Subsidiesfromthecentralgovernmentandstategovernmentscover30–90percentofthecostofthepumps.Tocovertherest,ClaroEnergyoffersseveralinnovativepaymentmodels.Undertheservicemodel,afranchiseefarmerownsamovablesolar-poweredpumpandrentsittoneighboringfarmers.Undertherental-purchasemodel,farmersownthepumpsafterthecompletionofaleaseperiod,typically12months.ImpactClaroEnergyhasinstalledmorethan1,200pumpssince2012,reachingmorethan17,000peoplein12statesinIndia.Ithasbroughtmorethan3,160acresoflandunderirrigationandreducedalmost511tonsofcarbondioxideayear,accordingtothecompany.Havingcontinuousaccesstoirrigationimprovesfarmproductivity.Italsoallowsfarmerstogrowcashcropswithhigherwaterrequirementsandhighervalue,suchassugarcane.ScalingUpThemaindriver for thebusiness are subsidiesprovidedby the government. By adding innovativefeatures to its product line tomeet specific rural requirements and consumer preferences, ClaroEnergyhascapitalizedonthesesubsidies,experiencingrapidgrowthsinceitsinception.Inthenearfuture,itplanstoexpanditsoperationstoBangladesh,Nepal,andsomeAfricancountries.A key bottleneck is financing. A solar pump costs more than microfinance institutions generallyfinance,andcommercialbanksandotherlendinginstitutionsareoftenunwillingtolendbecausethesolarpumpsarenotperceivedassufficientcollateral.Toaddresstheproblem,ClaroEnergyhasbeenraising the awareness of the benefits of solar pumps among the banking community, throughworkshopsandseminars,toincreasethecreditavailability.ClaroEnergyfaceshighworkingcapital requirements,asmostpaymentsarenotreceivedupfront.Attractinginvestmentfromprivateequityinvestorsandventurecapitalistsisalsodifficult,becauseofthe lack of track recordof transactions in theoff-grid energy industry. Banking andother lendinginstitutionswillhaveanimportantroletoplayinsustaininggrowth,particularlyassubsidiesmaybephasedoutinIndia.