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| | = Introduction to Business Plans = | | = Introduction to Business Plans = |
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| − | The main aim of a business plan is to convince lenders, investors, or donors to provide financing. These stakeholders require a business plan to evaluate the risk-return profile of a specific project or company/cooperative (UNEP, 2003). A business plan outlines the business idea, the principle road map of development and fully describes the investment opportunity (NRECA, 2009) | + | The main aim of a business plan is to convince lenders, investors, or donors to provide financing. These stakeholders require a business plan to evaluate the risk-return profile of a specific project or company/cooperative<ref name="UNEP (2003). REED Toolkit – A Handbook for Energy Entrepreneurs. Retrieved from: http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf">UNEP (2003). REED Toolkit – A Handbook for Energy Entrepreneurs. Retrieved from: http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf </ref>. A business plan outlines the business idea, the principle road map of development and fully describes the investment opportunity<ref name="NRECA, 2009. Guides for Electric Cooperative Development and Rural Electrification”.Retrieved from https://www.nreca.coop/wp-content/uploads/2013/07/GuidesforDevelopment.pdf">NRECA, 2009. Guides for Electric Cooperative Development and Rural Electrification”.Retrieved from https://www.nreca.coop/wp-content/uploads/2013/07/GuidesforDevelopment.pdf</ref> |
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| | A comprehensive business plan for the development of a new mini-grid project should consider all the institutional, organizational, financial, and regulatory issues and steps required for its startup and its operation. This includes the organizational structure of the institution, the plans for management and staffing, the power supply procurement, the engineering solutions for the distribution line and the generator design and construction, the financial analysis based on estimates of operating costs and revenues, and the regulatory procedures for registration, licensing, retail power tariffs, etc. | | A comprehensive business plan for the development of a new mini-grid project should consider all the institutional, organizational, financial, and regulatory issues and steps required for its startup and its operation. This includes the organizational structure of the institution, the plans for management and staffing, the power supply procurement, the engineering solutions for the distribution line and the generator design and construction, the financial analysis based on estimates of operating costs and revenues, and the regulatory procedures for registration, licensing, retail power tariffs, etc. |
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| | The following sections provide two examples from publicly available literature that gives guidance on developing a business plan for a rural electrification or renewable energy project. | | The following sections provide two examples from publicly available literature that gives guidance on developing a business plan for a rural electrification or renewable energy project. |
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| | UNEPs (2003) “REED Toolkit – A Handbook for Energy Entrepreneurs” has a whole chapter on how to write a business plan for energy entrepreneurs. The detailed outline of an energy business plan described in the toolkit is reproduced below (more information can be found in the original report downloadable under [http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf]). | | UNEPs (2003) “REED Toolkit – A Handbook for Energy Entrepreneurs” has a whole chapter on how to write a business plan for energy entrepreneurs. The detailed outline of an energy business plan described in the toolkit is reproduced below (more information can be found in the original report downloadable under [http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf]). |
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| | '''Cover and Table of Contents''' | | '''Cover and Table of Contents''' |
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| | Disclaimer and Confidentiality Statement | | Disclaimer and Confidentiality Statement |
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| | '''Executive Summary''' | | '''Executive Summary''' |
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| | '''Section 1 – Business Description''' | | '''Section 1 – Business Description''' |
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| | Permits and licenses | | Permits and licenses |
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| | '''Section 2 – Opportunity''' | | '''Section 2 – Opportunity''' |
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| | ''Describe and defend in the customers that will buy your product or service. The goal of this section is to prove that there are sufficient customers that are willing and able to buy your product.'' | | ''Describe and defend in the customers that will buy your product or service. The goal of this section is to prove that there are sufficient customers that are willing and able to buy your product.'' |
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| | '''Section 3 - Marketing''' | | '''Section 3 - Marketing''' |
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| | Distribution Plan | | Distribution Plan |
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| | '''Section 4 – Competition''' | | '''Section 4 – Competition''' |
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| | Competitive advantage | | Competitive advantage |
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| | '''Section 5 – Operations''' | | '''Section 5 – Operations''' |
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| | Operations | | Operations |
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| | '''Section 6 –Technology''' | | '''Section 6 –Technology''' |
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| | This section describes in detail the technology and energy resource to be used. Explain the process, appropriateness and track record. Use section completed in Feasibility Analysis. | | This section describes in detail the technology and energy resource to be used. Explain the process, appropriateness and track record. Use section completed in Feasibility Analysis. |
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| | '''Section 7 – Finance''' | | '''Section 7 – Finance''' |
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| | Cash Flow | | Cash Flow |
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| | '''Section 8 – Schedule''' | | '''Section 8 – Schedule''' |
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| | ''Write a schedule and timeline of major milestones to be reached. Use schedule from Feasibility Analysis section.'' | | ''Write a schedule and timeline of major milestones to be reached. Use schedule from Feasibility Analysis section.'' |
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| | '''Section 9 – Risk Factors''' | | '''Section 9 – Risk Factors''' |
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| | ''This section describes the risks that the business faces and how the business plans to deal with these risks. Include the risks with possible mitigation measures.'' | | ''This section describes the risks that the business faces and how the business plans to deal with these risks. Include the risks with possible mitigation measures.'' |
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| | '''Section 10 – Impacts''' | | '''Section 10 – Impacts''' |
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| | Pollution avoidance or elimination | | Pollution avoidance or elimination |
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| | '''Closing''' | | '''Closing''' |
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| | ''The Closing section of this business plan summarizes the businesses’ proposed capitalization plan and what is being requested from lenders and investors.'' | | ''The Closing section of this business plan summarizes the businesses’ proposed capitalization plan and what is being requested from lenders and investors.'' |
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| | '''Attachments''' | | '''Attachments''' |
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| | Detailed background and financial information about the sponsor | | Detailed background and financial information about the sponsor |
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| − | | + | {{Go to Top}}<br/> |
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| | = NRECA (2009), business plan contents = | | = NRECA (2009), business plan contents = |
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| | [Executive Summary] | | [Executive Summary] |
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| | *One paragraph for each major section of the plan. | | *One paragraph for each major section of the plan. |
| | *Summarize highest level points only | | *Summarize highest level points only |
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| | #Project History and Overview | | #Project History and Overview |
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| | *Establish project background, local conditions and socioeconomic context. | | *Establish project background, local conditions and socioeconomic context. |
| | *Describe project scope and current status. | | *Describe project scope and current status. |
| | *Introduce any major contextual issues and solutions. | | *Introduce any major contextual issues and solutions. |
| − | <ol>
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| − | <li>Market Analysis</li>
| + | #Market Analysis |
| − | </ol>
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| | *Estimate electricity sales using a “groundup” approach. | | *Estimate electricity sales using a “groundup” approach. |
| | *Analyze components and segments of the market, growth and risk. | | *Analyze components and segments of the market, growth and risk. |
| | *Include a table summarizing the initial and projected market. | | *Include a table summarizing the initial and projected market. |
| − | <ol>
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| − | <li>Power Supply</li>
| + | #Power Supply |
| − | </ol>
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| | *Present power source and transmission supply. | | *Present power source and transmission supply. |
| | *Identify initial and future power requirements. | | *Identify initial and future power requirements. |
| − | *Describe pricing and other fi nancial terms, along with reliability of supplier. | + | *Describe pricing and other financial terms, along with reliability of supplier. |
| − | <ol>
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| − | <li>System Design</li>
| + | #System Design |
| − | </ol>
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| | *Present key characteristics of distribution system design, in phases if appropriate. | | *Present key characteristics of distribution system design, in phases if appropriate. |
| | *Describe main system facilities and include a diagram of the electrical system. | | *Describe main system facilities and include a diagram of the electrical system. |
| | *Include a schedule of major components and costs. | | *Include a schedule of major components and costs. |
| − | <ol>
| + | |
| − | <li>Management Plan</li>
| + | #Management Plan |
| − | </ol>
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| | *Describe project ownership and organization. | | *Describe project ownership and organization. |
| | *Explain governance, audit provisions, and legal representation. | | *Explain governance, audit provisions, and legal representation. |
| | *Present biographies on key people; list staff positions and their salaries/wages. | | *Present biographies on key people; list staff positions and their salaries/wages. |
| − | <ol>
| + | |
| − | <li>Operational Plan</li>
| + | #Operational Plan |
| − | </ol>
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| | *State the guiding operational philosophies. | | *State the guiding operational philosophies. |
| | *Address enough detail to express competence in operating a electric cooperative. | | *Address enough detail to express competence in operating a electric cooperative. |
| | *Describe major programs or thrusts, especially if different from industry norms. | | *Describe major programs or thrusts, especially if different from industry norms. |
| − | <ol>
| + | |
| − | <li>Marketing Plan</li>
| + | #Marketing Plan |
| − | </ol>
| + | |
| | *State the philosophy of the rural electric cooperative regarding its relationship with customers. | | *State the philosophy of the rural electric cooperative regarding its relationship with customers. |
| | *Show your thorough understanding of the market. | | *Show your thorough understanding of the market. |
| | *Explain and list rates segmented by customer class. | | *Explain and list rates segmented by customer class. |
| − | <ol>
| + | |
| − | <li>Regulatory Approval</li>
| + | #Regulatory Approval |
| − | </ol>
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| | *Identify areas of regulatory oversight and the relevant governmental authority. | | *Identify areas of regulatory oversight and the relevant governmental authority. |
| | *Explain the approval process. | | *Explain the approval process. |
| | *Report status to date. | | *Report status to date. |
| − | <ol>
| + | |
| − | <li>Financial and Economic Analysis</li>
| + | #Financial and Economic Analysis |
| − | </ol>
| + | |
| | *Perform financial model projections for 10 years and an economic analysis if requested. | | *Perform financial model projections for 10 years and an economic analysis if requested. |
| | *State all major assumptions and have supporting justification on hand. | | *State all major assumptions and have supporting justification on hand. |
| | *Insert a table and describe key results, including project returns and risks. | | *Insert a table and describe key results, including project returns and risks. |
| − | <ol>
| + | |
| − | <li>Project Implementation</li>
| + | #Project Implementation |
| − | </ol>
| + | |
| | *List concrete steps and demonstrate the ability to execute them. | | *List concrete steps and demonstrate the ability to execute them. |
| | *Insert a Gantt chart or other graphical representation of steps. | | *Insert a Gantt chart or other graphical representation of steps. |
| | *Show responsibilities, completion targets, and key project milestones. | | *Show responsibilities, completion targets, and key project milestones. |
| | + | |
| | + | <br/>{{Go to Top}} |
| | + | |
| | + | = Further Information = |
| | + | |
| | + | *[[Portal:Mini-grid|Mini-grid portal on energypedia]] |
| | + | |
| | + | = References = |
| | + | |
| | + | <references /><br/> |
| | + | |
| | + | [[Category:Financing_and_Funding]] |
| | + | [[Category:Mini-grid]] |
The main aim of a business plan is to convince lenders, investors, or donors to provide financing. These stakeholders require a business plan to evaluate the risk-return profile of a specific project or company/cooperative[1]. A business plan outlines the business idea, the principle road map of development and fully describes the investment opportunity[2]
A comprehensive business plan for the development of a new mini-grid project should consider all the institutional, organizational, financial, and regulatory issues and steps required for its startup and its operation. This includes the organizational structure of the institution, the plans for management and staffing, the power supply procurement, the engineering solutions for the distribution line and the generator design and construction, the financial analysis based on estimates of operating costs and revenues, and the regulatory procedures for registration, licensing, retail power tariffs, etc.
The following sections provide two examples from publicly available literature that gives guidance on developing a business plan for a rural electrification or renewable energy project.
UNEPs (2003) “REED Toolkit – A Handbook for Energy Entrepreneurs” has a whole chapter on how to write a business plan for energy entrepreneurs. The detailed outline of an energy business plan described in the toolkit is reproduced below (more information can be found in the original report downloadable under http://energyaccess.wikispaces.com/file/view/REED_Entrepreneur_Toolkit1-4.pdf).
This section describes in detail the technology and energy resource to be used. Explain the process, appropriateness and track record. Use section completed in Feasibility Analysis.
The “Guides for Electric Cooperative Development and Rural Electrification” from NRECA (2009) discusses the purpose, the process and the components of business plans for rural electric cooperatives. The presented information is not only relevant for cooperatives but also for other operator models. The components discussed in the guide are given below, for more detail please refer to the report itself (https://www.nreca.coop/wp-content/uploads/2013/07/GuidesforDevelopment.pdf).
