DATABASE

Case study

Dazin: Combined Fuel + Stove Modern Cooking Energy Solution

ongoing



Link
www.dazin.org


Abstract

Dazin provides a combination of Fuel Cookies and Gasifying Stoves as a long-term source of affordable, reliable and renewable cooking energy solution to the rural households in Bhutan. Fuel Cookies are made by compacting forestry wood waste provided by rural beneficiaries and used in high efficiency, multi-functional smokeless Gasifying Stoves.


Project Description

In our targeted area (Bhutan & North-East India), 64% of households use firewood and forestry waste for cooking and heating. Currently, 110,000 households are exposed to the harmful smoke from open cooking fires, causing a series of health and environmental issues. Bhutan is one of the highest firewood per capita consumers in the world. The average firewood consumption is 17.8 kg/day per household, which is used for both cooking and heating. Bhutan also has a 100% dependency on India for limited import (700 tons/month) of fossil fuel based Liquid Petroleum Gas (LPG) for cooking, which is mainly used in urban areas in Western Bhutan. Dazin provides free Fuel Cookies and Gasifying Stoves combined solution to rural households in exchange of forestry wood waste collected by them at our Collection Points (CP). This collected waste is densified into fuel cookies in our local factory. Due to the efficiency of Fuel+Stove system, we produce fuel cookies in excess compared to wood waste collected. These surplus fuel cookies are sold in cities to offset the free services in rural areas and scale our impact to new areas. For example, a woman living in rural area provides us with half of the forestry wood waste at local CP compared to open fire burning. She gets in return enough free fuel cookies and a smokeless stove on lease to meet her cooking demands. Rest of the fuel cookies made from her input is sold as a cost-effective fuel to meet the demand of 4 equivalent urban households.


BENEFICIARIES

The main beneficiaries are rural women and children as they are directly exposed to indoor air pollution. Getting non-fossil fuel based reliable and affordable energy also benefits urban households and restaurants. We hire rural women & unemployed youth in the supply chain management of the project.


Results

All the fuel cookies transactions are tracked and recorded, which help us to monitor the use of stoves and its potential impact. We also measure retention rate, efficiency, health benefits and environmental impact. − MDG1: Savings of US$2.3 per month per household − MDG2: 50% time reduction in wood waste collection helping children to free their time for education − MDG3: Empowering women as a main beneficiary − MDG4,5,6: Smokeless cooking fire, reducing 8 deaths/minute globally due to open cooking fire − MDG7: 84% wood resources saving compared to open-fire cooking. Reduce 4 tons/year of carbon emissions by replacing open wood fire by a household and reduce 7 tons/year by replacing imported Liquefied Petroleum Gas (LPG) consumption; − MDG8: This project is a partnership between the organizations in Denmark and Bhutan − 200+ people are registered in the waiting list as our future customers. Several restaurants in urban areas are interested in buying affordable Fuel Cookies.


Business Model

Dazin has a high profit margin (~65%) even by selling the fuel cookies at 50% cheaper price than the commercial LPG price; which is also a strong reason for restaurants to buy from us. The fuel production cost is $0.07/kg and fuel selling price is $0.33/kg for commercial customers and $0.16/kg for urban households. This profit is what enables us to offer non-monetary services in rural areas by cross-subsidization, recover back the equipment costs in ~3.5 years and capital to expand in new areas.


Lessons Learnt

Most obvious market-based energy solution is to sell clean stoves but the most common challenge faced by previous cook-stoves programs is “How to sell and maintain clean stoves to people earning less than $2/day?” Clean stoves require fuel, such as wood, LPG or electricity. Over time, all of these fuels can be far more expensive or time consuming than the stove itself. While the cost of clean stove is a vital aspect of any customer’s decision, it turns out the daily cost of fuel or time spent is far more important for low-income households. We have concluded that “Reliable and cost-effective fuel supply is as important as clean stoves for a household to obtain sustainable cooking energy”.


Key Feature

Dazin is registered as a cooperative, owned by the local communities members. Dazin’s value proposition is the Fuel+Stove combination system that is affordable by every household- even by the poorest of the poor through the cross-subsidized revenue model. The fuel production equipment cost is just ~$9.7 per household with the average lifetime of 25 years. One 500 kg/hr biomass densifying machine can provide fuel for ~6700 households (considering worst case scenario). The gasifying stove cost is $65 per household (10 years lifetime), which can also be used for fodder cooking and it gives a 5 KW strong heating that is required in our targeted area. It can also charge mobile phones and light a bulb. The total cost per household (~US$82 including fuel equipment and distribution) might be higher than other “cook-stoves only” ventures, however we recover the cost by fuel sales (within ~9 months/household) and provide a sustainable cooking energy along with scalable transformational impact.


Other significant information

We are in partnership with Happy Green Cooperative– our local partner in Bhutan and Community Forest Member Groups. Our model and supply-chain are handled in the following way: 1) Collection Points (CP): Rural costumers bring forestry waste to CP, where it is weighed and transported to the production site. CP is made on local women’s land for which they get half a month of Fuel Cookies free of charge and they are trained to maintain and manage CPs. For every 6 kg of dried forestry wood waste given at CP, 1 kg of fuel cookies is returned back to the households giving them more cooking time than open fire. 2) Retail Points (RP): We sell the Fuel Cookies and lease stoves to urban residents at RP. Dazin prefers to hire urban unemployed youth who have migrated from rural communities. Dazin found out early on that when people see our Fuel Cookies and Stove together in action, the product sells itself, sparking the behavior change. This is the reason that we do many live mass demonstrations.


Main Donor

a) Ben & Jerry Join Our Core Award / Ashoka Mentoring 2013/14, b) Swedish International Development Agency, Innovation Against Poverty Grant, 2013, c) LaunchPad Denmark, Ministry of Business 2013/14 d) Deliotte Entrepreneurship in Denmark Jury and Audience Award 2012.
(International agencies)

Implementing Actor

Happy Green Cooperative (Others)