The themes of technological innovation, entrepreneurship, and organizing

Off-Grid Lighting as a Product-Service System

In 2004, the Global Nature Fund and a local Kenyan NGO started to work on an alternative to kerosene lamps. Together with OSRAM, a leading manufacturer of lighting solutions, and SolarWorld, a manufacturer of solar panels, they developed a new solution tailored to the needs of developing countries. OSRAM manufactured portable lamps, which consisted of a rechargeable battery (O-Box) unit and a robust and waterproof energy-saving lamp (O-Lamp). Interestingly, OS­RAM did not sell those lamps, but created a PSS by lending those products to local residents. In order to do so, an on-site station was established, where lamps are handed out and recharged by using solar panels installed on the rooftop ofthe building. This service was supported by micro loans to make it affordable to local residents. Hence, this product - based service promised cheaper, more reliable and ecologically beneficial off-grid lighting.

In the following, the sustainability effects of this solution in the use and end-of-life phases of the physical life-cycle are analyzed. A simplified version of the earlier presented Table 1 serves as evaluation matrix. The analysis is limited to maj or and well-known effects ofthe PSS, as they already provide a good indication of the overall value and effects of the proposed offer. Basic sustainability effects (resource consumption, etc.) and in-depth analyses (cost structures, eco-balances, working conditions, etc.) are - for reasons of clarity - not explicitly mentioned. Firstly, we focus on the ef­fects of the product (i. e. the technological level) itself. Then the impacts derived from introducing the PSS are discussed.

Analysis of Technology Level

From a technological viewpoint, the introduction of O-Lamps with energy saving lamps results in several advantages in comparison to the earlier used kerosene lamps. However, it also poses some disadvantages and new economic, environmental, and social risks, which are described in Table 3:

Economic effects: The assessment of effects within the lifecycle of production is generally undertaken from a company’s point of view. At this point, we resign an in-depth comparison of different cost structures of O-Lamps and kerosene lamps. Generally speaking, if we assume cost - covering business practices of OSRAM, negative effects for production and recycling exist, but are not higher than accumulated lending revenues per lamp. However, considering the maintenance phase from a user’s point of view, we can analyze the economic effects ofthe O-Lamp. By capturing solar energy, the price of charging the batteries is around 20% lower than the price of kerosene for the same amount of lighting. The costs of recycling

O-Lamps were not known at this point of time, but can be considered as negative and moderate.

Environmental effects: Considering the use phase, the introduction of off-grid lighting leads to a maximum reduction of CO2 and other toxic emissions while the lamps are used. It has to be noted that the reduction of CO2 is possible due to solar energy collected on the roofs of the recharging stations. Furthermore, environmental pollution from spilled or dumped kerosene is removed entirely. However, O-Lamps pose some environmental risks in the end-of-life phase, as some hazardous materials are part of the energy saving lamps (e. g. mercury) and batteries (e. g. plumb). Hence, these products carry certain risks, if not recycled properly.

Social effects: Regarding the use phase, the reduction of toxic emissions in houses ofthe local users leads to healthier living environments and less air pollution. Furthermore, accidents with kerosene lamps, which may lead to severe burns or deaths, can be avoided. Another indirect, but noteworthy, effect is the improvement of living and, foremost, learning conditions. Generally, young children may only be able to study in the evening, when home from school or work. However, kerosene lamps are rather improper due to the poor quality of light. By having ac­cess to better and longer lighting, children have improved opportunities for education. From an end-of-life perspective, the use of mercury within the O-Lamps and the use of batteries cause health risks, when not recycled properly.

Analysis of the PSS level

The off-grid lighting solution depicts an illustra­tive example of a PSS: by lending rechargeable battery packs, these packs can be used more often and can be maintained more easily. Therefore, the assessment of sustainability effects on a PSS level is of particular interest (Table 4):

Economic effects: As mentioned above, the assessment of the production phase is very company-specific and carried out in this case study rather generically. The analysis of the use phase, however, reveals remarkable effects. By offering a lending service of its product, the product is much more affordable to local residents. This is due to the fact that the actual usage of a product can be split up in single value-adding packages and then sold separately. In contrast, the sales based on transfer of ownership do not allow such separation and can only be sold once. Ac­cordingly, while a classical approach of selling lamps and transferring ownership would impose a very high economical entry barrier, lending out lamps leads to a lower price level per „utility unit“ and therefore significantly increases the market reach of this product. In fact, in this case study, the introduction of a lending service enables the access to technological innovations and SOIs in the first place. The support of micro loans adds to this fact that lower economical entry barriers can be considered as a key achievement of PSS innovations in developing countries. Conse­quently, in developing countries PSS can be re­

garded as enabler for SOIs on a technological level.

Environmental effects: Major environmental effects of the overall PSS can be determined in the use and end-of-life phase. By collecting solar power at the recharging stations, clean and renewable energy sources can be guaranteed in the use phase. Regarding the end-of-life phase, the collection of battery packs and their recycling and disposal is more feasible.

Social effects: Noteworthy social effects on the level ofthe PSS are created mostly during the use phase. By lowering the economical entry barriers, the PSS discloses the accessibility of technology to the poor and can hence lead to improved liv­ing standards of the population. The operation of energy hubs as charging station is an investment in local infrastructure and thus may also add job opportunities to local communities. Still, it may also be considered that such new infrastructure and offerings put previous job opportunities (e. g. kerosene trading) at risk - the positive job effect thus might be outweighed.

In summary, Table 5 gives an overview of all effects on the technological level and the PSS level.