ICT solutions: in detail
This part of the study provides 3 more cases, 1 for each area explored. As well as providing more detail, these cases have tried to pinpoint energy-efficiency solutions, which are either already being applied to the developing world, or where some application is foreseeable.
This has required working within certain constraints - of time and data availability. Data availability is partly a function of time but indeed it is also a case of how relatively immature the application of ICT for energy efficiency purposes is. There simply are not that many projects which have been implemented, with long track records. There are a lot of interesting ideas, applications, businesses and pilot projects being developed, mostly in the developed world.
The following three studies should keep that in mind.
Replacing kerosene lanterns with solar-powered, rechargeable LED lights
'Smart buildings' is simply not a notion that directly translated to the developing world. There are more basic problems to attend to than the use of sensors and wireless automated systems to reduce the energy-intensity of commercial and residential buildings, spending thousands of dollars per annum to run buildings.
So, the smart building case study takes a key function of a 'building' and a key focus area for energy savings - namely, lighting - and looked at its applicability to the developing world. This is an example of using ICT for carbon emission gains.
Detailed description/ background
A primary source of greenhouse gas emissions in the developing world comes from hazardous and expensive fuel-based sources such as kerosene. About 1.6 billion people in the developing world-especially Asia and Africa-still depend exclusively on kerosene or candles to light their homes23 once the sun sets; millions more have unreliable electrical connections. It is estimated that a single kerosene lamp emits 400 pounds of greenhouse gases per year, or 1 ton of CO2 over a lifetime of 5 years.24 Every year, kerosene lamps are responsible for over 100 million tons of CO2 emissions.25 Kerosene lamps are also a key contributor to indoor air pollution, which claims the lives of 1.5 million people each year, over half of which are under the age of five.26 Kerosene lamps have caused countless deaths by suffocation, burns and fatal fires.
D.light Design, which specializes in the design of low-cost, durable and highly efficient lighting technologies that use light-emitting diodes (LEDs), is an example of 'smart buildings' for the developing world.
Some lights are sold directly to consumers, while others are distributed through relief agencies and aid organizations. In its first year, 2008, D.light reached about 100,000 people in 8 countries; by 2009, D.light distributed lights to an additional 500,000 people in 28 countries. In April 2010, in a recent interview conducted with the company, it said its lights were helping 1 million people in 30 countries. By the end of 2010, D.light's goal is to distribute lights to between 2 million and 5 million people.
In late 2008, D.light began partnering with the microfinance organization Beyond Solar to bring solar lighting to households in rural India. The trial began in Puki, Ganjei Pradar, and New Kerenga-three tribal villages in the Koraput district of southern Orissa, in which families were 100% dependent on kerosene for lighting. All three were recently displaced as a result of the construction of a hydro-electric dam, yet all are without grid-supplied electricity. The average village household of three to four people earned approximately Rs 625 ($12.50) per month, with the primary source of income in selling agriculture products and manual labor such as breaking stones. The average monthly kerosene expense was approximately Rs. 100-150, with all reporting damage to homes and injuries from kerosene lamp fires. The villagers made approximately two or three trips to the market per week to get fuel, with the average distance to the nearest market of 5 km.
Field workers from the local NGO South Orissa Voluntary Action (SOVA) and Beyond Solar made one or two trips to the village simply to ask questions, demonstrate the benefits of the lights, and build rapport with people. The field workers left a few lights with the villagers so they could experience the benefits of the lights firsthand. After this trial period, the workers returned to the village to hear about their experiences and then to sign up interested villagers for D.light Design's Nova lantern, which provided up to 40 hours of solar powered light on one charge using an ultra-efficient LED lighting source. Beyond Solar established a financing program that required a small down payment followed by weekly installments. The trial resulted in an average adoption rate across the three villages of 72%. After two months, the on-time repayment rate of loans was 100%, and the average kerosene usage of 11 liters per family per month was eliminated among households that adopted the technology, also eliminating trips to the market. The target for the trial was 50 households, but 162 ended up participating.
Description of the ICT technology deployed
D.light designed a range of rechargeable, solar-powered LED lamps that can serve as portable or stationary lights, without the necessity of grid access. D.light drives down costs through concentration and expertise in product design, mechanical and electrical engineering, high-volume manufacturing, and quality assurance. The company sources components such as LEDs from partners including Korea's Seoul Semiconductor and uses some contract manufacturing, but oversees the manufacturing chain from prototyping to production engineering and factory production. The company has also focused on intensive product development research, spanning ethnographic and user studies, market studies, design and technology.
As access to electricity can be nonexistent or limited in rural areas, D.light focused on deploying a light that would use scarce amounts of energy efficiently. D.light says its LEDs are 30% to 50% more efficient than fluorescent lights. D.light solar products come equipped with a high-quality, efficient solar panel that is weather-resistant and installation-free. An extensive outdoor wire is included when the panel is separate from the lantern. D.light products are designed to withstand daily usage and harsh environmental conditions. Each individual product is manufactured to ensure weather-resistance, ability to withstand a two-meter drop, and protection for internal circuitry from dust and insects. D.light lamp models offer two to four brightness settings to allow customers to optimize light output and energy usage based on specific needs. D.light lamps can also serve as an energy source for charging mobile phones, with full charging in as little as two hours. Some lamps are also equipped with a smart battery indicator to show when the battery is 25%, 50%, 75% and 100% full.
There are three series of lamps offered:
- Nova series: The Nova Mobile provides high-quality light while doubling as a mobile phone charger. It can provide up to 12 hours of bright light on a day's charge, and can recharge a mobile phone in as little as 2 hours. Now available globally, the Nova Series uses highly efficient LEDs. It is 8 - 10 times brighter than a kerosene lantern. The lamp gives an even white light projected at a wide angle, and can effectively illuminate an entire room. All Nova solar models include an efficient, portable solar panel with a lengthy outdoor cable for convenient solar charging.
- Kiran: The Kiran provides up to 8 hours of light on a full battery and uses highly efficient LEDs. It is four times brighter than a kerosene lantern and provides 360-degree illumination. The lamp gives an even white light that can illuminate a workspace and can be used for a variety of activities like studying, cooking, or walking. A highly efficient solar panel is integrated into every Kiran for solar charging.
- Solanta: The Solata provides up to 15 hours of light on a full charge and uses highly efficient LEDs. It is 5 - 6 times brighter than a kerosene lantern, and performs exceptionally well for tasks where light is required from specific angles. Each Solata includes an efficient, portable solar panel with a lengthy outdoor cable for convenient solar charging.
Implementation issues / challenges
Current challenges for adoption of new lighting technologies in developing markets include:
- Customer education
- Creating a supply chain
- Technology improvement
- Affordability of products
Customers for off-grid lights are in some of the remotest areas of the world, and many have never seen electricity or solar-powered products. Successful deployment requires companies to create a strategy to spread the word that the product exists, and to convince customers to abandon a lighting source they are familiar with for an unfamiliar technology. Especially in Kenya and India. In more active markets, companies must combat tainted market perception caused by low-quality lighting products.
Companies have also reported challenges in accessing their target customers, and must develop a supply chain to get products to remote villages. NGOs and relief organizations have helped some companies break into markets. Local entrepreneurs play significant role in market acceptance, but companies must first convince local workers to leave stable jobs to join a startup. Companies face similar challenges when setting up offices in foreign countries, especially those in which they do not know the local languages.
Another focus is improving the efficiency and usefulness of products. Solar power is intermittent and sometimes unpredictable, which reduces the usefulness of solar-powered lights. D.light added an AC power charging option for overcast days for those customers who can access an electrical outlet, but the company is continuing to work to find solutions. Future products may include a more advanced energy storage option to make overcast days less of a problem for these customers.
Companies must find a way for customers with little extra income to afford the upfront cost of lighting technologies. D.light says it was careful not to "over-engineer" the products, aiming to keep the price as low as possible by developing new products based on customer feedback. D.light works with contract manufacturers and suppliers to ensure the lowest-possible prices for components and manufacturing. The company also recently opened operations in China to help it make products at high volumes and low cost without compromising quality.
Financing is the final major hurdle for adoption of new lighting technologies, and D.light has not yet been able to find partners to offer financing on a widespread scale. D.light has completed successful trials with microfinance institutions in small, poor villages that many companies don't typically reach, but it's not clear if the crossover will work everywhere: D.light has faced some difficulties when educating local credit officers about solar technology.
Companies must be innovative in marketing and distribution strategies when targeting customers in some of the remotest areas of the world. D.light has launched rural marketing campaigns in India and East Africa, and has developed a rural entrepreneurship program in India, whereby individual people sell D.light products to their family, friends, and neighbors on commission. That increases reach into the most rural areas and provides supplementary income for rural households.
Partnerships are essential in developing new supply chains. D.light's sales and marketing teams actively build partnerships with major distributors and local dealers to reach semi-urban and rural households. In addition, D.light partners with NGOs and distributors outside of primary markets to reach households around the globe. Logistics partners enable the company to ship products to any port in the world to meet the needs of partners worldwide. The company recently provided 35,000 solar lanterns for earthquake relief efforts in Haiti in partnership with multiple relief organizations in the devastated areas, most of which did not have access to electricity and relied solely on generators and solar power. D.light products were distributed among aid agencies and earthquake victims in the affected areas. Previously, D.light distribution partner Food for the Poor had provided over 7,000 Nova products to impoverished families in Haiti.
Rather than viewing poor villagers simply as customers, successful companies consult with them and view them as co-creators. Early on, D.light focused on creating lanterns with rechargeable batteries; after learning that many villagers didn't have an easy way to charge those batteries, they switched to solar. After customers expressed a need to charge their cell phones, the company introduced a new product that includes an outlet for phone charging. D.light did extensive testing in the field with customers and incorporated feedback into the final product. As a result, it designed rugged products that can survive drops of up to 15 meters. The lamps are water resistant, have vents to prevent heat buildup in the batteries, and include built-in mesh to prevent bug zapping and buildup. The products are simple enough for children to operate, and have ergonomic, multiple-setting handles that make them functional for hanging, using on a table, carrying, mounting on a wall, or when walking, cooking, studying, and bicycling.
Cost is extremely important in the developing world, where even a $5 price difference can open new markets, and available financing is crucial for customers who cannot afford the upfront cost of products. The company initially began selling $15-$30 lamps but found that was still too high for many in the target market. The company worked with suppliers to drive down costs, launching the Kiran lamp in India in late 2009 that retails for $10 to $15.
The cost of D.light's trial in southern Orissa was approximately $10,982 for 162 households. After two months, microfinance provider Beyond Solar reported that the on-time repayment rate was 100%. The customers reported tangible cost savings, as well as quality of life improvements.
The average kerosene usage of 11 liters per family per month was eliminated among households that adopted the technology, a savings of $3 per month. Customers were also able to eliminate the 5-km average trip to the market two or three times per week for kerosene. The average household earned $12.50 per month prior to the trial, but the light enabled families perform domestic activities at night, leaving more time for income work during the day. Families also began working at night in leaf-plate manufacturing, netting up to Rs. 10 per day. The average family earned an extra $0.20 per day, with the average monthly family income increasing to $18-nearly 50%.
Customers reported a noticeable improvement in air quality and safety, with typical usage of the lights for three to four hours per night at the highest brightness settings. The lights enabled children to study up to four hours a night, which was not possible with kerosene lighting. The lights were also used to make food preparation at night more sanitary, by preventing insects from getting in food. Mobile uses of the lights included protection from bears and other wild animals at night, and nighttime inspection of crops.
D.light's lamps cost between $10 and $30, depending on the features and exchange rate, and are guaranteed to last one to five years, depending on the product and level of usage. D.light's Rs. 499 ($10) Kiran solar lantern is expected to directly compete with kerosene lanterns, as two kerosene lanterns (Rs. 150 or $3 each) require users to spend Rs. 40 per lantern on fuel per year. D.light says the Kiran lamp pays for itself in 3-4 months with no recurring costs. D.light says families typically spend 5% to 30% of their monthly income on kerosene oil, with a typical farmer or shopkeeper finding the D.light products pay for themselves in about six months.
Emerging business models and their relevance to developing countries
D.light is addressing the distribution model through "rural entrepreneurs," who are the last link in the company's long supply chain. The commission-based positions are used to convince neighbors in remote villages that D.light's product is a worthwhile investment. They have also been instrumental in arranging informal financing plans, installment payments, and loan programs to encourage sales. In Tanzania and other developing countries, D.light is attempting to boost local sales and entrepreneurship through Youth Solar Entrepreneur competitions that asked students to write a business plan detailing current lighting sources in their village, where would they sell solar lamps, and how would they do their financing and marketing.
D.light is also working with financing institutions that can offer loans to their clients. D.light has done several effective pilot projects with microfinance institutions such as Beyond Solar but hasn't been able to roll out financing on a large scale. The Shell Foundation recently partnered with D.light to provide risk capital to jumpstart these relationships. The poorest customers often do not have the cash flow to pay for the lamps up front, so microloans are enabling them to repay the cost incrementally with money they would have otherwise spent on kerosene. The Shell funding is also being used to test out a variety of marketing activities, from grassroots promotions to mass media radio ads. D.light plans to integrate the most effective strategies into ongoing operations. D.light has rural marketing campaigns in India and East Africa.
Example 2 - Smart Grid
Private utility using ICT to improve energy efficiency, network reliability, billing efficiency and consumer relations.
Most Smart Grid initiatives and innovations seem to be very focused on the developed world - for two reasons, One, the developed world's energy usage is so high that efficiencies can provide a very meaningful payback on investment. Two, fewer places in the developing world have grids, let alone are worrying about smart grids.
However, it may be that this is a missed opportunity as energy is scarce in the developed world and thus too precious to waste. The next case does concern the grid and is in the developing world, namely India.
Detailed description/ background
Established in July 2002, North Delhi Power (NDPL) was set up as a joint venture between the state government of Delhi and Tata Power to bring efficiencies to the power sector through privatization. NDPL distributes electricity across an area of 510 square kilometers in north and northwest Delhi, serving 1 million consumers. It has a peak load of around 1250 MW.
When NDPL took over from Delhi Vidyut Board in 2002, the unit's aggregate technical and commercial (AT&C) losses were 53% to 60%, meaning that the company was losing revenue on more than half the power that it distributed. The losses were due to poorly maintained equipment, poor bill collection and power theft. Under the newly established NDPL, a team was assembled to reduce energy losses, improve technology, and reform the financial and personnel infrastructure.
Description of the ICT technology deployed
NDPL developed a smart distribution network that allows most of the 52 grid stations to be remote controlled from a central command center to increase safety, reliability and maintenance savings-and to expedite the resolution time for faults. The automation was based on a Geographical Information System (GIS) that mapped the entire network and mapped customers to the distribution transformers supplying them. This system was dovetailed into the customer relationship management system so that customer requests could be processed more efficiently.
NDPL also deployed a Centre for Network Management comprising state-of-the-art electrical automation systems like SCADA (supervisory control and data acquisition), EMS (energy management system), DMS (distribution management system), and a GSM-based street lighting system. NDPL developed an in-house method for automatic meter reading (AMR) for its industrial customers to register energy usage through remote sensing-reducing the need for manual intervention and the possibility of mistakes or theft.
Implementation issues / challenges
Even as it improved its knowledge of its grid, a continued problem for NDPL was fighting power theft. As a preventative method, the network incorporated modern techniques like a High Voltage Distribution System (HVDS). The utility also incorporated AMR to ensure the accuracy of power bills for its major customers. However, the utility also incentivized legal connections by awarding regular-paying consumers with offers and discount schemes. NDPL also introduced energy coupons called Urja that can be gifted. With a significant part of its customers residing in low-income housing, NDPL set up a program to provide free life insurance policies to those customers to encourage legal electricity connections.
NDPL also had significant work to do in exchanging information with its customers about their bills and energy usage. The new management at NDPL aimed to improve its rudimentary customer relations and engagement, while making it easier for customers to pay. In 2003, NDPL had 19 payment centers for 1 million consumers, but in six years set up 1,200 payment avenues including an online billing and payment site, ATM-like kiosks for automated bill payment, and consumer centers and call centers. NDPL set up an SMS based fault management system that helps improve reliability of power supply by allowing consumers to alert the company of outages.
NDPL faced the same operational challenges as many utilities in developing markets: lack of visibility into its assets, human error, theft, and equipment failure. The first step in addressing all those issues- and losses of 53% to 60%-was NDPL performing a thorough accounting of its grid and the energy assets produced. ICT has been essential in enabling the utility to continue to implement changes during the past seven years.
NDPL used in-house expertise to develop an AMR system, but implemented it only at its industrial customers, which represented 60% of its consumer base. As a result, NDPL was able to make the smallest investment possible for the biggest impact.
Its capital efficient strategy included using customers to help it identify and precisely locate failures and faults on the grid. NDPL gained 24/7 feedback on the grid's functionality while having to make a relatively small investment in a system that enabled customers to communicate problems through SMS on mobile phones.
With cost in mind, NDPL also addressed power theft through a combination of preventative technologies and incentives to customers, thus increasing its customer base.
NDPL invested Rs 1,700 crore ($362 million) over six years in technology and network upgrades. Its efforts resulted in a significant drop in energy losses and an increase in revenue.
The AMR system alone did away with former problem areas of billing errors, tampering of meters by unscrupulous consumers and fudging of meter readings, thus easing revenue flows from big ticket customers that comprised 60% of NDPL's consumer base.
The company reported AT&C losses in 2008 of 18.5%-a drop of over 65% since 2002. That helped the company exceed year-on-year targets, earning post-tax return on investment of an average 27% per year. The company reported in FY08 profit after tax of Rs 281.58 crore, with revenues showing an increase of 11.45% at Rs 2,287 crore. Since then, AT&C losses in NDPL areas have shown further decline to 14% as of March 31, 2010-a drop of 74% since 2002.
Emerging business models and their relevance to developing countries
NDPL is exploring opportunities to replicate its experience of distribution reforms in other places by taking consulting assignments for electricity boards in other Indian states, as well as overseas. NDPL has recently been retained as an IT consultant by Power Finance Corporation to assist other electricity boards in India.
NDPL is advising utilities and power providers on best practices in customer communications, transmission and distribution. The company is currently executing on a consultancy service to reduce losses at a public electricity corporation through the Republic of Yemen Ministry of Electricity and Energy. NDPL was also recently tapped for an IT consultancy under R-APDRP for Chattisgarh State Power Distribution Company Limited and Dakshin Haryana Bijli Vitran Nigam Limited. NDPL is serving as project manager and consultant to implement Geographical Information Systems at Tata Power Company Limited, and a consultant to deployment the CRM Module at Tata Power Company Limited. NDPL is providing support as a consultant to Haryana Distribution Companies (DHBVN & UHBVN) to establish a monitoring and evaluation framework for agricultural consumers.
Completed projects include the development of call center and consumer care centre for Paschimanchal Vidyut Vitran Nigam Limited (PVVNL - Noida Circle); advisory support for restructuring of transmission & distribution for Central Electricity Board (CEB) in Mauritius; and implementation the corporate restructuring of Nigeria Electricity Power Authority (NEPA), now PHCN (Power Holding Company of Nigeria), Bureau of Public Enterprises (BPE), Abuja.
Example 3 - Smart Logistics
Software and hardware to help fleet drivers and transit agencies improve fuel efficiency
Driver behavior is universal. The driver's habits that increase fuel consumption of a public bus in Chicago would have a similar impact in Mumbai. The mistakes that make a truck driver in Germany more likely to get in an accident, also have the same result in China.
While much attention has been given to improving the supply chain with technology, the field of training drivers to perform their jobs more efficently and safely is still in its infancy. The next case study is not set in the developing world, but it has applications there that make the technology very promising. Indeed, the company profiled have plans to take their application to some developing countries.
Detailed description/ background
Driving behavior contributes up to 33% of fuel consumption27 due to subtle decisions that drivers make. In addition, driver behavior leads to over 90% of vehicle crashes28, with an estimated annual cost of more than $200 billion29 in the U.S. on physical losses alone. General training courses have not proven an effective method for changing long-term driving behaviors, creating a market for driver-specific feedback and coaching.30 Trucking fleets, transit agencies, insurance companies and consumer groups are among the customers adopting new technology to measure, improve and sustain safe and efficient driving behavior.
Redwood Shores, California-based GreenRoad Technologies, Leeds, England-based Masternaut Three X, and San Luis Obispo, California-based Fleet Management Solutions are three companies that are deploying technology to address efficiency in this segment of the supply chain. This report has chosen to look more closely at GreenRoad to illustrate how ICT can have a beneficial impact in terms of energy usage and carbon in the world of transportation logistics - albeit in the developed world.
The technology is initially being adopted by medium and large fleets, which range from several hundred to thousands of vehicles, because fuel efficiency has a great impact on profitability. GreenRoad reports that it currently has 90 fleets as customers, in sectors such as trucking, public transit, telecommunications, service delivery, passenger transportation and public safety. Its announced customers include Ryder, Ericsson, FirstGroup, LeFleur Transportation, and the UK Ministry of Defence.
IDM Trucking Inc. is an employee-owned transportation company that hauls general household goods and beverages in dry vans for clients including small to large sized businesses in the U.S. mid-Atlantic region. In 2008, the company decided to self-install GreenRoad's technology in all its vehicles. IDM says that some drivers initially expressed apprehension about the new addition to their vehicles and the possible distraction by a new screen, but became more comfortable after receiving the personalized feedback. Drivers saw improved mileage per gallon, resulting in annual fuel savings of $1,500 per vehicle. IDM's crash frequency dropped from 0.38 crashes per 1 million miles in 2008, to zero in 2009. Each crash eliminated reduced IDM's cost by an average of $16,500, based on National Highway Traffic Safety Administration cost per crash data. IDM's insurance rates also dropped as accidents decreased.
Another GreenRoad customer is Balfour Beatty Utility Solutions, an operating company of Balfour Beatty, a global engineering, construction, services and investment business. BBUS is one of the UK's leading utility solution providers, with a strong position in international markets. It works across the water, wastewater, gas and power industries, providing a range of services that contribute to the maintenance and provision of essential utility assets. BBUS was seeking to reduce its annual fuel bill of £12 million, and reduce risk to the public and its workforce as part of its Zero Harm initiative. The company started using GreenRoad software in late 2008, and deployed the technology to several BBUS depots, which reported a 60% reduction in risk and up to 10% in fuel savings. As a result, in May 2010, BBUS announced a three-year contract to roll out GreenRoad across its entire commercial fleet of 1,400 vehicles, including Light Commercial Vehicles (LCVs), Heavy Goods Vehicles (HGVs) and company cars.
Sheffield Insulations, the UK's leading distributor of insulation products, is part of the international SIG Group. Sheffield deployed GreenRoad's service in August 2009 across its fleet of HGVs and LCVs at its Ruislip depot that covers from West London to Surrey and Oxfordshire. By November 2009 the company had achieved a 24% reduction in the number of accidents over the same period in 2008 and a 9.7% reduction in fuel consumption.
Description of the ICT technology deployed
GreenRoad employs sensors to monitor up to 120 separate driving events in five categories: speed handling, cornering, land handling, braking, and acceleration. The technology analyzes a driver's maneuvers, recognizing unsafe or inefficient movements. The in-vehicle display provides immediate feedback and coaching to the driver, and seeks consistent patterns of behavior. The dashboard-installed box flashes green, yellow or red depending on the level of driving risk. The device uses a cellular modem to transmit the safety data back to servers, which use patented algorithms to evaluate overall driving risk and skills. A website provides real-time reports and analysis to managers, who can assess how driving habits can be improved and assess risk by driver, by organization or fleet-wide. The company says its technology can help drivers improve fuel economy 10% and reduce crash costs 50%.
The in-vehicle device is relatively low cost, taking advantage of commodity hardware components. The value-add is GreenRoad's algorithms to understand what the vehicle is doing and how that impacts safety and efficiency.
The technology captures extreme behaviors, such as speeding and fast acceleration, but its value lies in that the technology also measures subtle habits that might not be immediately obvious. The most common finding affecting fuel efficiency is drivers exceeding the corporate speed policy (often established at 55 miles per hour to maximize fuel efficiency) by 3 or 4 miles per hour, which over time burns significantly more fuel.
Implementation issues / challenges
Technology focused on driver behavior is a new category of service, so education is crucial for market acceptance. Many companies and fleet managers are unaware of the impact that driver behavior has on fuel economy, instead focusing budgets on technology to improve vehicle or route efficiency. GreenRoad and other technology providers must educate their customers about potential savings, before even trying to differentiate their products from competitors'.
Although the service is highly automated, GreenRoad reports that it takes a fair amount of setup and education of fleet managers and drivers to maximize efficiency and safety. The company also offers ongoing support for its subscription-based product. With 90 employees, GreenRoad is focused on in a select few markets-the U.S., UK, Canada, Germany and Israel-but has ambitions to expand to India, China, Brazil and other developing markets when it can support the languages and training needs.
Initial setup can be a challenge because fleets involve hundreds of vehicles in many locations, all of which must be outfitted with the same hardware and software. Without careful coordination, the installation process can be extremely inefficient, taking additional time and delaying the company-wide implementation.
Classroom training has limited effectiveness because many drivers will revert back to habits. An environment of sustained change requires multiple forms of feedback, support, and targeted training. Finding the right combination can be challenging. Successful programs include alerting drivers while in vehicles, ranking drivers within companies, and conducting classroom training.
Most of the issues that affect driver behavior and decision making are universal to drivers, regardless of size and type of vehicle, training, experience, job function, age, race and nationality. That has enabled GreenRoad to deploy the same technology to improve the operation of light vehicles, tractor trailers and city buses in different countries with the same results. However, some differences are pronounced, and GreenRoad developed algorithms that can assess the different driving needs of different contexts (a city bus driver versus one driving cargo cross-country).
GreenRoad has found that training is less effective when drivers and managers are not properly briefed in advance on what the new system is, what types of feedback it will give, and why the information is valuable. In order to do things differently, drivers must believe the feedback they are getting is credible. It helps to have endorsement or support from union leaders and senior drivers.
Positive reinforcement is as important as negative reinforcement. GreenRoad has seen that the majority of drivers engaged in a constructive and positive way will make changes, whereas if they perceive as something as a burden or as criticism, they are unlikely to sustain those changes. Positive feedback includes awards for safe and efficient driving, as well as a positive tone for coaching and feedback.
GreenRoad's customers report savings on two fronts: reduced fuel consumption and fewer crashes (leading to less downtime, less equipment replacement, and lower insurance costs). Customers make a payment upfront to cover the cost of hardware, installation and training, as well as a subscription fee that can be charged monthly, quarterly, or annually that provides access to the service. The total cost per vehicle over three years is about $1,500. GreenRoad says the technology pays for itself in about six months, with a net savings of $1,000 to $4,000 per year per vehicle. There is currently no real economy of scale to be gained with larger deployments, so small and medium fleets see the payback in the same period as large fleet customers.
Emerging business models and their relevance to developing countries
GreenRoad has not deployed its technology in developing countries because of the cost to enter an unfamiliar market with language barriers. The issues that impact driver behavior are highly similar despite variables on location, job function or driver experience, so a safe projection is that the GreenRoad software and hardware would have applications in developing countries as well. The low upfront cost of its commoditized hardware means no significant upfront investment by customers-a plus when entering developing countries. The subscription-based model allows for the technology to produce cost savings greater than the price of the subscription, especially in markets in which vehicle safety is a major expense.