Description of the sector/context and its distinctive elements
- Energy projects tend to focus on expanding access to affordable and renewable energy (e.g. improved cook-stoves, solar lighting) for poor and marginalised consumers. There is a heightened importance placed on consumer perceptions and attitudes that require addressing during the design of interventions.
- While there is an increasing recognition that energy access is often best supported through ‘energy markets’ or supporting enterprise development of energy firms, there is less familiarity with the terminology of a market systems or PMSD approach. This requires careful translation and communication with donors and other projects.
Key adaptations to PMSD use cases
- Market analysis/mapping: Energy reverses the flow of the core chain, as the focus is on who receives the energy. Often looking at productive uses of energy – to make energy economic. It is crucial to differentiate between very different energy markets (e.g. for transport fuel vs. electricity vs. cooking fuels).
- Facilitating interventions: For many technologies (e.g. solar lamps, mini grids) often the product is manufactured internationally so there are large market actors managing a vertically integrated core market chain up to the point of importation and even distribution. This creates a very different power dynamic compared to traditional agriculture market systems with a large number of smaller market actors and many intermediaries. Negotiation and facilitation requires skill and confidence to interact with large multinational firms in some cases. Often key constraints lie in the distribution network, particularly the ‘last mile’ to reach dispersed consumers – these challenges are well suited to the core strengths of PMSD in terms of building relationships, trust and information flows.
- Monitoring systemic change: For energy solutions to reach a wider systemic change, it is almost always necessary for public sector actors – electricity companies or regulators – to be engaged in order to make policy changes and to approve expansion of the existing energy systems. This requires careful sequencing for those actors to be involved, and to influence their behaviour at the right point in the change process.
Links to case studies: Electric cooking markets in Nepal