By external blogger Bennett Cohen. This blog was previously published by Empower Generation
Most technology managers are familiar with the concept of "disruptive innovation". Harvard Business Professor Clayton Christensen coined the phrase in his 1995 article, "Disruptive Technologies: Catching the Wave", where he explains that most
"… disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream."
Put differently, disruptive technologies are usually novel configurations of existing components that offer unique value for "down-market" customers, often at a lower margin than high-performance technologies for "up-market" customers. Today's incumbents, focused on up-market customer needs, are likely to ignore disruptors until it is too late. A good example of this phenomenon is digital photography, which was originally so low performing that chemical-photography companies largely ignored what was happening until it was too late to evolve.
We see growing evidence that small-scale Photovoltaic (PV) power systems (and other renewable energy technologies) will be disruptive in the energy and utility space. Today, simple systems that bundle PV cells with advanced batteries, efficient LEDs, and simple mobile phone chargers, like the ones Empower Generation sells in Nepal (see picture above), are the most competitive solution to meet basic power needs in Base of Pyramid markets. Attributes required by this market include affordability, lack of dependence on fossil fuel, quick deployability, functionality without existing infrastructure, extreme durability, and limited maintenance needs. The environmental benefits of the technology are purely coincidental.
While the revolution taking place in BoP energy markets is increasingly appreciated, players in the centralised and large-scale energy generation space accustomed to dealing in Gigawatts (billions of watts) for utility customers may take little notice of the watt-scale PV systems that are taking emerging markets by storm. Energy companies that want to avoid the mistakes of film companies should take notice.