Renewable and Sustainable Energy Reviews 64 (2016) 362–371

Contents lists available at ScienceDirect

Renewable and Sustainable Energy Reviews

journal homepage: www.elsevier.com/locate/rser

What is challenging renewable energy entrepreneurs in developing

countries?$
Cle-Anne Gabriel n
Otago Business School, University of Otago, New Zealand

art ic l e i nf o a b s t r a c t

Article history: This paper cumulates the findings from a review of the challenges faced by renewable energy entrepreneurs
Received 7 August 2015 in developing countries. To date, research that could facilitate the success of renewable energy entrepreneurs
Received in revised form in the world's developing regions has been fragmented across two main bodies of literature – management
3 January 2016
(specifically, entrepreneurship) and renewable energy. By conducting a qualitative review of the extant lit-
Accepted 16 June 2016
erature, I propose that the findings from both bodies of research may be distilled to six (6) key challenges:
inadequate access to institutional finance; the price of renewable energy technologies (RETs); the lack of
Keywords: skilled labour; underdeveloped physical infrastructure and logistics; power/dominance of incumbents;
Renewable energy inadequate government or policy support. Through this research, I not only advance a unified con-
Entrepreneurship
ceptualisation of the challenges faced by renewable energy entrepreneurs in developing countries, but also
Developing countries
highlight a number of the revealed opportunities for future research.
& 2016 Elsevier Ltd. All rights reserved.

Contents

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362
2. Review method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
3. Review of challenges identified by previous research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
3.1. Entrepreneurship challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
3.2. Renewable energy challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364
4. Renewable energy entrepreneurship challenges in developing countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
4.1. Inadequate access to institutional finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
4.2. Price of renewable energy technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
4.3. Lack of skilled labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
4.4. Underdeveloped physical infrastructure and logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
4.5. Power of incumbents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
4.6. Inadequate government or policy support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368
5. Conclusions and opportunities for future research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369

1. Introduction and local enterprise [3,8,9]. In particular, entrepreneurship has been

Improving the uptake of renewable energy technologies in
developing countries may be catalysed by certain policy measures
[1–3] and market incentives [4–7], but also by entrepreneurship
☆
The author would like to acknowledge the financial support received in the
form of a University of Otago Doctoral Scholarship for undertaking this research.
n
Correspondence address: Department of Management, Otago Business School,
University of Otago, PO Box 56, Dunedin 9054, New Zealand.
E-mail address: cleanne.gabriel@otago.ac.nz
touted as an important solution where fossil energy utilities remain
an inherent, embedded feature of the institutional status-quo [3].
The risk-taking, innovative, and institution-changing [13–16] fea-
tures of entrepreneurial endeavour are key ingredients needed to
break the hold of incumbent fossil energies and facilitate the spread
of renewable energy technologies [10–12]. This paper aims to
combine and distil the findings from previous research in entre-
preneurship and renewable energy, identifying the challenges faced
by renewable energy entrepreneurs in developing countries. This

http://dx.doi.org/10.1016/j.rser.2016.06.025
1364-0321/& 2016 Elsevier Ltd. All rights reserved.
 C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371
review was approached with the following questions in mind:
(1) How best can the challenges presented in the literature be
summarised and distilled? (2) What is suggested about how
entrepreneurs may overcome these challenges? (3) What are the
revealed opportunities for further research?
Although entrepreneurship has been identified as an important
solution for developing countries, the literature's coverage of the
challenges that may be faced by entrepreneurs working in the
renewable energy space has been fragmented. An understanding
of the challenges faced by entrepreneurs in general can be gleaned
by studying the business management and entrepreneurship lit-
erature [17–21], while the challenges to the uptake of renewable
energies are covered substantially in a range of technical [22,23],
policy [1,2,24] and business [17,25] literatures. Indeed, the pro-
minence, effectiveness and unique business models offered by
enterprises such as Grameen Shakti, Illumination Solar, and those
under the Lighting Africa programme suggest the need for a body
of research that focuses on the business models, success factors
and challenges associated with renewable energy entrepreneur-
ship, specifically in developing countries. Microfinance and
microfranchising schemes, for example, have been investigated,
and factors such as policy [1,3], overall ease of doing business
[26,27] and government support [24,28] have been identified as
contributing to the success of renewable energy start-ups in
developing countries. However, I surmise that understanding the
challenges faced by renewable energy entrepreneurs in such
environments requires, first, a coalescence of the management and
renewable energy literatures on the subject and, second, an
assessment of the gaps in our coverage of the means of over-
coming these challenges to date.
This paper combines the management literature that focuses
on challenges that may affect entrepreneurs in developing coun-
tries, and the renewable energy literatures that focus on the
challenges and obstacles to increasing the uptake of renewable
energy technologies in such countries. In so doing, a unified con-
ceptualisation of the challenges faced by renewable energy
entrepreneurs in developing countries is advanced, and opportu-
nities for future research and for helping entrepreneurs overcome
these challenges are highlighted.
2. Review method
The literature was reviewed by using qualitative meta-analytic
methods, which allow the synthesis of the findings and implica-
tions of previous studies. The aim of using this approach is to
derive an understanding of the body of knowledge built-up
around renewable energy entrepreneurship challenges in devel-
oping countries. Individual studies have focused on specific chal-
lenges faced by entrepreneurs and renewable energy stakeholders
in various developing country contexts. This method facilitates the
accrual of the findings from these individual studies.
Topical similarity and inclusion were determined by searching
the ProQuest Central, Academic OneFile, Business Source Complete,
Academic Search Complete, Scopus, Science Direct and Web of Science
databases for documents whose abstracts met one or more of
three topical search criteria. These search topic criteria were
renewable energy entrepreneurship (search terms “renewable
energy” AND “entrepreneur*”), renewable energy challenges
(search terms “renewable energy” AND “challenge” OR “con-
straint”), and entrepreneurship challenges (search terms “entre-
preneur*” AND “challenge” OR “constraint”). The results of these
searches were further refined to include only scholarly peer-
reviewed articles published since 1990, and these results were
even further assessed to determine relevance to renewable energy
363
entrepreneurship in developing countries. International develop-
ment literature was also consulted in parallel.
A total of 499 unique and relevant journal articles were found.
These articles were analysed in NVivo using a Template Analysis
method. This involved developing a broad template list of chal-
lenges from the start then, by coding each of the 499 articles into
relevant existing challenge nodes and creating new nodes as new
themes emerged, a final list of the main challenges identified by
the papers was derived. The original template list consisted of only
2 nodes – entrepreneurship challenges and renewable energy
challenges – which was further developed during analysis into a
final list of 31 hierarchical nodes. Distillation of the main issues
addressed by the articles resulted in a final list of six key chal-
lenges. First, however, the main identified challenges to entre-
preneurship (Section 3.1) and renewable energy uptake (Section
3.2) in developing countries are presented separately.
3. Review of challenges identified by previous research
The entrepreneurship and renewable energy literatures have
developed steadily and independently over the years. The key
findings from each of these literatures are therefore explained
independently first (Sections 3.1 and 3.2), and then jointly (in
Section 4), so as to highlight the commonalities that are pertinent
to renewable energy entrepreneurs in developing countries.
3.1. Entrepreneurship challenges
Challenges that have been identified as being influential on
entrepreneurial action in developing countries include poor pro-
vision and access to formal finance and credit [26,29], lack of
investor protection [26], the provision and effectiveness of gov-
ernment regulations and incentive programs [27,30], political
stability [31], access to information or education on how to start a
new business [29,30,32], supply and demand [33], technical and
infrastructural limitations [31] and factors influencing institutional
integrity, such as corruption [29,34]. Indeed, the entrepreneur's
ability to identify and exploit opportunities is strongly influenced
by the challenges faced [35–38]. Researchers such as Busenitz et
al., Van Burg et al. and Katila and Shane argue that institutional
constraints are of particular concern [30,33,39,40], as entrepre-
neurs in developing countries face far more constraints than
others [17,18]. Indeed, Child and Tsai [17] and Zhou and van
Witteloostuijn [18]) confirm that businesses in developing
economies tend to experience significant government and political
involvement in their affairs [17,18].
The Global Entrepreneurship Monitor (GEM) has also identified
nine Entrepreneurial Framework Conditions (EFCs) that affect the
quantity and quality of entrepreneurship activity at the national
level: education and training, entrepreneurial culture and respect
for entrepreneurs, government regulations, government pro-
grammes and commercial, legal infrastructure, market dynamics,
R&D transfer, government policy, physical infrastructure and
finance [41,42]. There is some consistency between the GEM EFCs
and the literature. Table 1 provides an overview.
Financial challenges consistently featured in the entrepre-
neurship literature. The main issues are, as shown in Table 1, the
non-existence or ineffectiveness of institutions that provide formal
financing options to entrepreneurs [43–46], and the difficulty
faced when trying to access credit [43,44,47,48]. In particular, the
lack of access to credit has been viewed as a major challenge to
entrepreneurs in developing countries. The World Bank has
highlighted the availability and knowledge of credit facilities and
overall investor attractiveness as crucial determinants of entre-
preneurial activity in sub-Saharan Africa in particular [26].
364 C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371
Table 1
Summary of entrepreneurship challenges.
Entrepreneurship challenges
Financial challenges
Poor provision and access to formal finance
Accessing credit
Physical/Technical challenges
Technical/infrastructure constraints
Challenges affecting demand
Unfavourable market dynamics (incl. lack of opportunities) and
industry structure
Knowledge-based challenges
Lack of R&D Transfer
Lack of access to information/education on starting a business
Governance challenges/Institutional voids
Lack of policy, legislative and tax incentives
Lack of enforcement: property rights, contracts, etc.
Normative challenges
Field-specific standards (formal)
Norms and rules (informal)
Lack of institutional integrity & formality
Lack of cultural value and respect for entrepreneurship
Physical or technical challenges refer to the infrastructure,
technology and support provided and managed by external enti-
ties, such as government and utilities [41,49]. Physical infra-
structure such as utilities, information and communication tech-
nologies, and transportation and logistics infrastructure have been
found wanting in sub-Saharan Africa [27]. Yet, despite their
importance for the successful running of businesses [20,50], Levie
and Autio surmise such challenges have “received less attention
from entrepreneurship researchers” [41]. In the same paper, they
also argue that the entrepreneur may also be affected by
knowledge-related challenges such as lack of access to information
on how to start a business [27,41], as well as, for technology
entrepreneurs, the knowledge deficits that may be caused by a
lack of R&D transfer [41]. Nepal conducted research in Nepal [51],
Boris Urban's research focused on South Africa [52], and the work
of Beeka and Rimmington spanned across the African region [53] –
these researchers all found the lack of knowledge about starting a
business to be an important issue.
Demand for the product or service offered by entrepreneurs is
another challenge. Christensen and Bower (1996) argued that
factors such as high production costs may increase the market
price of the product or service, reducing its attractiveness on the
market [54,55]. On the other hand, it has more recently been
argued by Parthan et al., and illustrated in the IEA/IRENA Joint
Policies and Measures Database, that government subsidies may
help alleviate this [93,94]. However, as shown in Table 1, gov-
ernance challenges are yet another issue faced by entrepreneurs.
Here, the main constraints faced are a lack of government policies
and incentives for entrepreneurship, as well as failure to enforce
such policies [19,21]. Busenitz et al. [39] investigated the rela-
tionship between certain country characteristics and types or
amounts of entrepreneurial activity, in particular the effects and
extent of local norms on entrepreneurship. In so doing, they
developed a Country Institutional Profile (CIP) framework that
may be of interest to renewable energy researchers interested in
the relationship between specific institutional or country-level
entrepreneurship parameters and various renewable energy fac-
tors. Normative challenges addressed in the literature include the
extent to which general society has a positive view of entrepre-
neurship [27,42,52,56,57], and whether entrepreneurial activity
matches both the formal [58] and informal [58,59] norms and
rules of the society. At the country level, the annual GEM surveys
Examples of author(s)
(Bianchi [43]; deMel et al. [44]; Kerr and Nanda [45]; Van Auken, [46])
(Bianchi, [43]; deMel et al., [44]; Kim [47]; Parker [48])
(Amoros and Bosma [27]; Levie and Autio [41]; Mambula [49]; Stel [19])
(Sirdeshmukh et al. [130]; Van Burg et al. [33]; Voss et al. [132])
(Levie and Autio [41]; Reynolds et al. [42]; Khoury and Prasad [123])
(Levie and Autio [41]; Reynolds et al. [42])
(Beeka and Rimmington [53]; Nepal [51]; Urban [52])
(Ardagna and Lusardi [115]; Baumol [56,114]; De Castro et al. [122]; Mullainathan and Schnabi
[116]; Urban [52])
(Mair and Marti [21]; Smallbone and Welter [131]; Stel [19])
(Desa [58])
(Desa [58]; Giné et al. [59]; Powell and Di Maggio [129])
(De Castro et al. [122]; Mullainathan and Schnabl [116]; Urban [52])
(Amoros and Bosma [27]; Baumol [52]; Davidsson and Wiklund [57]; Reynolds et al. [42]; Urban
[52])
investigate general societal perspectives of entrepreneurship. The
focus is on the extent to which social and cultural norms encou-
rage or allow entrepreneurship [27].
3.2. Renewable energy challenges
Table 2 summarises the challenges identified as being specific
to renewable energy uptake in developing countries.
The lack of provision or access to finance, including the ease
with which both renewable energy proponents and end-users can
access credit, has been highlighted by researchers as the main
challenge to the uptake of renewable energy technologies. Also,
the prevailing institutional conditions in developing countries do
not consider the needs of investors. Research has shown that
private investment in renewable energy is affected by many fac-
tors that are not specifically addressed by policy [60–62]: for
example, perceived risks [63,64] and un attractiveness of the
business strategies employed by new market entrants [65–67]. It
has been argued that renewable energy policies in developing
countries need to target, specifically, a reduction of the risks
involved in using renewable energy instead of institutionally
established fossil fuels. It is indeed challenging to develop
mutually agreed upon policies that make fossil energies less
attractive and financially feasible.
The dominance of fossil fuel incumbents and their supporting
institutional/governance structures is therefore another important
constraint. Obstacles to improving the uptake of renewable energy
technologies, such as infrastructural, logistical and cost-efficacy
problems related to upscaling/expanding demonstration projects
[68] and the lack of attention paid to increasing demand by setting
up and developing end-user markets [22,69], are related to the
overarching institutional challenge of the legitimacy and lock-in of
incumbent fossil fuel technologies [23,70,71]. The work of Berg,
Pietzner, Volkmann, and Fischedick [60], Jackson [72], Klessmann,
Held, Rathmann, and Ragwitz [73], Walsh [67] and Balachandra
et al. [74], for example, all emphasize the importance of improving
the policy environment in order to provide a more enabling
environment for the uptake of renewable energy technologies.
Developing countries represent a context with a particularly
unsupportive institutional environment. This means that propo-
nents and agents of renewable energy are not only faced with
challenges related to the uptake of renewable energy technologies,
 C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371 365

Table 2
Summary of renewable energy challenges.

Renewable energy challenges Examples of author(s)

Securing investor/financier interest (Brunnschweiler [81]; Dinica [88]; Foster-Pedley and Hertzog [75]; Loock [65]; Randjelovic et al. [77])
Poor provision & access to formal finance (Aslani and Mohaghar [90]; Linnanen [126]; Mohammed et al. [127]; Zyadin et al. [24])
Accessing credit (Aslani and Mohaghar [90]; Lüdeke-Freund and Loock [66]; Nepal [51])
Grid distribution, preparedness & stability (Mahama [103]; Mohammed et al. [127]; Rady [107]; Reddy and Painuly [98]; Schmidt et al. [25])
Installation site preparedness and onsite infrastructural and (Aslani and Mohaghar [90]; Glemarec [106]; Mahama [103]; Mohammed et al. [127]; Rady [107])
production issues
Constraints affecting demand from end-users (Balachandra et al. [74]; Linnanen [126]; Negro et al. [128]; Rady, 1992; Yunus and Jolis [133])
Technology price (Arinaitwe [91]; Aslani and Mohaghar [90]; Foster-Pedley and Hertzog [75]; Kirchgeorg and Winn
[92]; Martinot [83])
Lack of (understanding) formal industry standards (Aslani and Mohaghar [90])
Competition and/or tension with fossil energy (service) (Brunnschweiler [81]; Christensen et al. [14]; Kim [120]; Mohammed et al. [127]; Richter [110];
providers Schoettl and Lehmann-Ortega [11]; Smink et al. [109]; Wüstenhagen and Boehnke [16])
Lack of R&D transfer (Aslani and Mohaghar [90])
Lack of capability/human resources (education, know-how & (Aslani and Mohaghar [90]; Martinot et al. [82]; Nepal [51]; Painuly [100]; Reddy and Painuly [98])
training of employees)
Lack of policy, legislative and tax incentives (Foster-Pedley and Hertzog [75]; Zyadin et al. [24])
Lack of government buy-in (Kim [120]; Lalic et al. [125]; Mohammed et al. [127]; Nepal [51]; Pinkse and Groot [121]; Smink [109])

but also the same institutional challenges faced by entrepreneurs
in general. The challenges related to increasing the uptake of
renewable energy technologies (Table 2) have therefore been
combined with the institutional challenges faced by entrepreneurs
in general (Table 1). The following section (Section 4) presents a
synthesis of the main findings from the literature on the main
challenges faced by renewable energy entrepreneurs in developing
countries.
4. Renewable energy entrepreneurship challenges in develop-
ing countries
The individual challenges found in the separated literatures on
renewable energy and entrepreneurship were combined. That is,
the challenges faced by entrepreneurs (highlighted in Table 1)
were compared to and consolidated with the challenges to the
uptake of renewable energy technologies (highlighted in Table 2).
This section presents some of the suggested solutions for over-
coming these challenges. Challenges related to lack of maturity
and the slow diffusion of renewable energy technologies were not
included in the following synopsis because, as explained in Section
1, such challenges are considered the reason that entrepreneurial
intervention is needed to accelerate the uptake of renewable
energy technologies in developing countries.
In summary, the literature shows that some of the most com-
mon challenges constraining renewable energy entrepreneurship
in developing countries include inadequate access to institutional
finance, relatively high prices, lack of skilled labour, under-
developed physical infrastructure, inadequate government or
policy support and the presence and power of incumbents. These
are the main groupings that have been found in the literature, as
shown in Table 3.
The findings are in line with expectations. However, they pro-
vide a useful framework for systematising and understanding the
challenges faced. They also reveal substantial opportunities for
future research.
4.1. Inadequate access to institutional finance
The inaccessibility of institutional or regulated finance is a major
issue in developing countries. In terms of solutions for overcoming
this challenge, two broad research themes recur: the nature of
renewable energy investment in various countries [65,66,75] and
the advancement and utility of venture capital (VC) and private
sector investments compared to tapping into public funds
[28,60,67,74,76,77]. Particularly in the European Union (EU) between
1990 and 2005, the major role of the government has been as a
facilitator of international private sector involvement in renewable
energies [74], not as a major investor itself. This approach is com-
pared to the situation in developing countries where governments'
intervention (or lack thereof) may directly intervene in renewable
energy business affairs [17,18]. International development pressures
have pushed such governments to directly invest in renewable
energy, rather than simply facilitating and encouraging the interest
and investment of the private sector, as is the case in the EU.
Recognising the tension between public and private financiers of
renewables, Atabi and Gboney suggest that the EU's approach is a
model that could be successfully adopted by developing countries
[78,79].
Balachandra et al. and Atabi both argue that in developing
countries, public-private funding and incentive partnerships are
likely to be more effective than relying solely on private VC
initiatives [67,74,78]. Indeed, the downstream renewable energy
sector is more decentralised and service-oriented, and is heavily
reliant on private sector investment [25,80]. In the unique case of
developing countries however, where public institutions are better
suited to facilitating rather than providing funding, and where
stock and bond markets and VC are still not adequately established
to provide large-scale funding [81], tapping into private invest-
ment may not be as effective and sustainable as it has been in
Europe.
Joint public-private or bi- or multi-laterally funded renewable
energy initiatives such as Grameen Bank (India), Illumination Solar
(Tanzania), Lighting Vanuatu (Vanuatu) and various World Bank-
funded rural electrification and solar home projects [82,83] have
had some success. Therefore, as Brunnschweiler and Reddy et al.
suggest, public-private partnership-type funding, particularly
those that rely on international bi- or multi-lateral funding, may
better facilitate the uptake of renewable energies in developing
countries [81,84]. Indeed, Koch and Caradonna (2006) suggest that
in general any kind of partnership (whether strategic, franchising
or otherwise) may be preferable to venturing alone [85]. As sug-
gested by Sklarew, the policy models adopted by China and India,
which have had some success in strategically opening their local
markets to external investment [86], may support this suggestion.
In particular, international development organisations have
become important providers of grant assistance for the development

Table 3
Summary of challenges faced by renewable energy entrepreneurs.
Challenges
Inadequate access to institutional finance
Securing investor/financier interest
Poor provision & access to formal finance
Accessing credit
Price of technologies
Inability to compete with fossil energy
(service) providers on price, so no market
Lack of R&D transfer
Unfavourable market dynamics & industry
structure
Lack of skilled labour
Lack of capability/human resources (edu-
cation, know-how & training)
Lack of cultural value and respect for
entrepreneurship
Underdeveloped physical infrastructure & logistics
Grid distribution, preparedness & stability
Technical/infrastructure constraints
Installation sites
Power of incumbents
Tension with fossil energy (service)
providers
Field-specific standards (formal)
Norms & rules (informal)
Inadequate government or policy support
Lack of policy, legislative and tax incentives X
Lack of enforcement: property rights, con-
tracts, etc.
Lack of institutional integrity & formality
Lack of government buy-in
Lack of access to information/education on X
starting a business
Entrepreneurship Examples of author(s)
challenges
X (Bianchi [43]; deMel et al. [44]; Kerr and Nanda [45]; X
Van Auken [46])
X (Bianchi [43]; deMel et al. [44]; Kim [47]; Parker [48]) X
X (Sirdeshmukh et al. [130]; Van Burg et al. [33]; Voss
et al. [132])
X (Levie and Autio [41]; Reynolds et al. [42])
X (Beeka and Rimmington [53]; Levie and Autio [41]; X
Nepal [51]; Reynolds et al. [42]; Urban [52])
X (Amoros and Bosma [27]; Baumol [56]; Davidsson and
Wiklund [57]; Reynolds et al. [42]; Urban [52])
X (Amoros and Bosma [27]; Levie and Autio [41];
Mambula [49]; Stel [19])
X (Desa [58])
X (Desa [58]; DiMaggio and Powell, 1983; Giné et al.
[59]; Powell and Di Maggio [129])
(Ardagna and Lusardi [115]; Baumol [56]; De Castro
et al. [122]; Mullainathan and Schnabl [116]; Urban
[52])
X (Mair and Marti [21]; Smallbone and Welter [131]; Stel
[19])
X (De Castro et al. [122]; Mullainathan and Schnabl
[116]; Urban [52]
(Amoros and Bosma [27]; Beeka and Rimmington [53]
Levie and Autio [41]; Nepal [51]; Urban [52])
366
Renewable energy Examples of author(s)
challenges
X (Brunnschweiler [81]; Dinica [88]; Foster-Pedley and Hertzog [75];
Loock [65]; Randjelovic et al. [77])
(Linnanen [126]; Mohammed et al. [127]; Zyadin et al. [24])
(Lüdeke-Freund and Loock [66]; Nepal [51])
X (Arinaitwe [91]; Aslani and Mohaghar [90]; Foster-Pedley and
C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371
Hertzog [75]; Kirchgeorg and Winn [92]; Martinot [83];
Balachandra et al. [74]; Linnanen [126]; Negro et al. [128];
Rady [107]; Yunus and Jolis [133])
X (Aslani and Mohaghar [90])
X (Schoettl and Lehmann-Ortega [11]; Smink et al. [109]; Wüs-
tenhagen and Boehnke [16])
(Aslani and Mohaghar [90]; Martinot et al. [82]; Nepal [51]; Painuly
[100]; Reddy and Painuly [98])
X (Mahama [103]; Mohammed et al. [127]; Rady [107]; Reddy and
Painuly [98]; Schmidt et al. [25])
X (Glemarec [106]; Mahama [103]; Mohammed et al. [127]; Rady
[107])
X (Brunnschweiler [81]; Christensen et al. [14]; Kim [120]; Moham-
med et al. [127]; Richter [110]; Schoettl and Lehmann-Ortega [11];
Smink et al. [109]; Wüstenhagen and Boehnke [16])
X (Aslani and Mohaghar [90])
X (Foster-Pedley and Hertzog [75]; Zyadin et al. [24])
X (Kim [120]; Lalic et al. [125]; Mohammed et al. [127]; Nepal [51];
Pinkse and Groot [121]; Smink et al. [109])
 C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371
of renewable energy projects in developing countries [82,83,87]. The
suggestion is that such partnerships and international development-
related funding schemes are a solution to the rampant inability to
access institutions-based funding locally, foster greater commu-
nication between all parties involved and encourage better discus-
sion of all aspects of the venture, thus potentially producing the best
result in terms of both business longevity and local sustainability
[78,80,88,89].
4.2. Price of renewable energy technologies
Some of the most often-articulated barriers to the diffusion and
uptake of renewable energies are related to the technologies’
inability to achieve economies of scale. Although this problem
largely affects upstream activities along the renewable energy
value chain [90], there are also considerable effects on down-
stream activities as the inability to achieve economies of scale
greatly affects the cost and, by extension, grid parity of renewable
energy technologies. Brunnschweiler argues that challenges
associated with the price of renewable energy technologies
directly hinder downstream entrepreneurial players who provide
end-user oriented services [81]. This is especially the case in
developing countries where end-users’ inability to afford renew-
able energy products and services may have a crippling effect if
alternative approaches are not found [90–92]. However, parts of
the development literature (the World Bank and Martinot et al.)
have argued that while this challenge may be addressed by
incentives such as government subsidies, tax breaks and feed-in-
tariffs (FIT) [93,94], these have mainly been effective in increasing
interest from developed countries, rather than improving afford-
ability in developing countries [80,82].
The first challenge to the renewable energy entrepreneur in a
developing country without adequate cost-defraying policy
incentives is therefore to develop business models that utilise
innovative pricing and/or cost-offsetting strategies that benefit the
end-user. Innovative strategies such as micro-financing and micro-
lending, as well as alternatives to the conventional purchase
model (such as technology leasing and fee-for-service (ESCO)
models) are potential solutions [16,80,82,95]. Microfinancing and
microlending, in particular, have been championed as examples of
business model innovations that improve end-users’ ability to
afford renewable energy technologies [82,96].
However, while the documentation of such strategies appears
to be increasing, much of the research carried out in this regard
consists of either review-type studies and general guidelines
[16,80] or studies that focus simply on a single strategy [10,97].
What is therefore lacking are comprehensive empirically-
motivated studies of how such strategies fit into the overall busi-
ness models used by entrepreneurs, and national- or regional-level
surveys of the effect of these strategies on entrepreneurial activity
in developing countries.
4.3. Lack of skilled labour
Improving the affordability of renewable energy technologies
may eventually increase the need for suitably skilled labour to
support increasing service demands. The problem of the shortage
of skilled persons in the renewable energy sector in developing
countries has been specified by Reddy and Painuly and Martinot
et al. as a shortage of skilled technical know-how [80,82,98],
referring to those skills and knowledge levels that are specific and
often unique to renewable energy technologies. Painuly and
Alazraque-Cherni have noted a considerable lack of technical
know-how in the areas of renewable energy installation, main-
tenance and repair in developing countries [82,90,99,100]. The
end-user is not reasonably expected to possess the know-how
367
necessary to maintain their own technologies, so the onus of ser-
vicing, maintenance, repair and part replacement is usually on the
entrepreneur him/herself and his/her business [82,99]. Also, for a
new business to grow, input from other individuals with similar
skills is required. Yet this is a major challenge for entrepreneurs in
developing countries [90,101].
A solution offered by the downstream market in many devel-
oped countries is either the re-training and subcontracting of
already existing service providers such as electricians, roofers and
plumbers to act as installers, or the outsourcing of such jobs
[16,102]. However this solution is documented mostly in European
markets, and whether similar solutions have been applied suc-
cessfully in developing country contexts has yet to be answered
empirically by the literature. In fact, the literature seems to focus
mainly on strategies related to overall know-how transfer from
developed countries [79,82] and China and India [86] as part of an
indirect, short-term solution to the skill shortage problem.
Research may therefore be needed to investigate this particular
context. For renewable energy businesses in developing countries
that do not use either existing artisans or outsourced labour, it
may be useful to investigate whether entrepreneurs and their
employees are being trained locally (and by whom). This would
improve our understanding of the strategies used by entrepre-
neurs to overcome the skill shortage problem in developing
countries.
4.4. Underdeveloped physical infrastructure and logistics
Kirchgeorg and Winn, and Samli identified inadequate infra-
structure and issues associated with the distribution of goods as
another challenge faced in developing countries [92,101].
Although the state of physical infrastructure in developing coun-
tries was generally rated positively by entrepreneurs in GEM's
2013 report, there is still concern about the situation in sub-
Saharan Africa [27]. Also, when viewed from the perspective of
entrepreneurship, the issue of physical infrastructure becomes
much more challenging as infrastructural issues surpass those
associated with distribution and also include issues of installation
[103].
In the particular case of developing countries, one of the major
themes is the supply of renewable energies to rural areas, which
are a target market for decentralised energy supply [80,103,104].
Decentralised supply has therefore been touted as perhaps the
best means of advancing the uptake of renewable energies in
developing countries, especially in remote rural areas [105–107].
Decentralised supply does not exclude the construction of one's
own infrastructure, but this is a strategy that seems to have been
used exclusively by larger companies and development initiatives
in developed countries [82,103].
An issue that has yet to be addressed, however, is the effect of
geographical, political and trade barriers on renewable energy
entrepreneurs’ ability to meet their logistical and import needs.
For example, do landlocked African countries feature less renew-
able energy than coastal ones? Do government import taxes and
duties (or lack thereof) impact the import routes taken, the
exchange rates and currencies traded, and therefore the cost
effectiveness with which entrepreneurs may import and distribute
renewable energy technologies? Further research may be directed
to addressing these issues in the near future.
4.5. Power of incumbents
To date, some of the main actors within the renewable energy
system are incumbent utility providers and other existing large
firms [108]. However, incumbent entities do not provide effective
alternatives to the fossil-fired status quo and, as Smink et al. have
368 C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371
claimed, they are slow, resistant or unable to change [14,109].
Compared to renewable energy start-ups however, utilities have
better access to finance and better ability to lobby for (or create)
institutional support [16,81,100,109,110]. Nonetheless, it is sug-
gested that utilities can successfully contribute to the uptake of
renewable energy technologies by investing in start-ups, as they
are more flexible and adaptable [11]. This issue, however, has only
been researched and discussed in the context of developed
countries, and no studies have been found to date that highlight
renewable energy businesses that have developed complementary
partnerships with incumbent utilities. Such arrangements are
theorised as being potentially advantageous to renewable energy
entrepreneurs, as they may be able to take advantage of the uti-
lities’ access to finance and their knowledge and control of existing
infrastructure [11,16,78,84,85]. Additionally, the entrepreneur can
then focus his/her business model on only the service aspects of
the value chain, thereby improving the end-user strength of the
business. Our understanding of renewable energy entrepreneur-
ship activities in developing countries might therefore benefit
from focusing on the dynamics of such partnerships [102], parti-
cularly from the perspective of the entrepreneur, rather than his/
her utility partner.
Another newly addressed issue with potential for future
research is the cultural acceptability of certain renewable energy
technologies [111], as certain culture or community may disagree
with, for example, the use of certain kinds of wastes as a source of
energy, or the construction of wind turbines in their community. A
2007 special issue covers the many dimensions of this challenge,
including community participation in decision-making, and the
extent to which communities trust the investors brining renew-
able energy to their locales. Also, the lack of cultural value and
respect for entrepreneurs in certain cultures has potentially sig-
nificant implications for renewable energy entrepreneurship in
developing countries [27,42,52]. Particularly in societies where the
good of the community is prioritised over individual benefit,
starting a business of one's own and venturing against the status
quo may be discouraged. Under such circumstances, increasing the
uptake of renewable energy technologies might rely more heavily
on government or institutional support, or on individual entre-
preneurs who must break from cultural norms in order to cham-
pion the increased uptake of renewables.
4.6. Inadequate government or policy support
A survey of 122 clean energy researchers and academics was
conducted recently in order to gauge their perceptions of the
biggest challenges to the uptake of renewable energy technologies.
Lack of government policies emerged as the most important
challenge faced; this challenge seemed to be especially important
to respondents from developing countries in Asia and Africa [24].
In developing countries, some argue that the lack of institutional
rigour and support poses a challenge to entrepreneurs
[101,112,113] as it is suggested that government policy plays a key
role in facilitating entrepreneurship and growth [114]. Conversely,
it has also been argued that strict regulation curbs entrepreneur-
ship, and that this is especially the case in developing countries
[115,116]. It has been suggested that an entrepreneurship-enabling
policy regime is the key ingredient for the accelerated uptake of
renewable energy technologies [117]. Technology-oriented inno-
vation policies that use a systemic approach are thought to be the
most effective in facilitating the successful diffusion of renewable
energy technologies [71,117–119]. However, it has been found that
government support still tends to favour incumbents [24,120].
Renewable energy entrepreneurs therefore need to become poli-
tically active, as incumbent utilities and larger energy businesses
do, in order to ensure they can influence the increased uptake of
renewable energy technologies [109,121].
Lack of government support or policies is viewed as an over-
arching challenge in the literature as it can affect all other aspects
of the renewable energy landscape, including education levels,
state of physical infrastructure, and accessibility of institutional
finance [30,32,52]. Together with price of renewable energy
technologies and access to finance, government support and the
need for enabling policies in developing countries were found to
be the three most often cited challenges in the literature.
5. Conclusions and opportunities for future research
In this paper, renewable energy entrepreneurship has been
used as a form of entrepreneurship concerned with the advance-
ment and uptake of renewable energy technologies. Indeed,
developing countries represent a context with particularly
unsupportive conditions, which means that proponents of
renewable energy are not only faced with challenges related to the
uptake of renewable energy technologies, but also the same
challenges faced by entrepreneurs in general. This research has
therefore combined the challenges related to increasing the
uptake of renewable energy technologies with the challenges
faced by entrepreneurs in general. The result is a unified con-
ceptualisation of the challenges that renewable energy entrepre-
neurs in developing countries may be facing. Organisations and
programmes that try to encourage renewable energy innovation
and development are often operating with limited budgets, par-
ticularly in developing countries. Therefore, an understanding of
the challenges faced by renewable energy entrepreneurs, as well
as the suggested means of overcoming them, may be useful in
helping such organisations to better arrange and prioritise their
efforts.
The preceding summation of the challenges that may be faced
by renewable energy entrepreneurs in developing countries has
relied on a considerable collection of research and development
literature. Indeed, the extant renewable energy and entrepre-
neurship literatures have effectively identified and contextualised
some of the lessons learned from existing start-ups and technol-
ogy deployments in developing countries, as well as from con-
ceptual analysis of the relevant issues in such countries.
However, conducting a review of the issues concerning
renewable energy entrepreneurship in developing countries has
also highlighted a number of opportunities for further work. These
opportunities are illustrated in Table 3 by the lack of papers
(denoted by no ‘x’) on five specific challenges to renewable energy
entrepreneurship in developing countries. First, in terms of
options for financing a renewable energy business, while existing
research (see Kozloff [124], Brunnschweiler [81] and Larsen et al.
(2012), for example) paints a vivid ‘big picture’ of the state of
renewable energy investment, the effect of such trends on the
individual renewable energy entrepreneur in developing countries
has still largely been neglected by extant research. Indeed, focus-
ing on the individual level is an area that would certainly add to
our understanding of renewable energy entrepreneurship in
developing countries. Who is the renewable energy entrepreneur?
What are his/her motivations? Are renewable energy entrepre-
neurs mostly locals, or internationals with international knowl-
edge or experience? How does this background affect his/her
ability to access finance? Some research is needed to better
understand the renewable energy entrepreneur him/herself in the
context of the unique challenges faced in their different country
and cultural contexts.
Second, much of the literature to date has focused on indirect
strategies (e.g. policy incentives and unique business models) for
 C.-A. Gabriel / Renewable and Sustainable Energy Reviews 64 (2016) 362–371
addressing the challenge of the price of renewable energy technologies
and the purchasing power of end-users in developing countries.
However, what may be lacking is a comprehensive assessment of more
direct strategies, such as the marketing strategies used by renewable
energy entrepreneurs in developing countries. That is, what are the
unique selling points that renewable energy entrepreneurs should
focus on? A marketing perspective of the business models used by
renewable energy entrepreneurs in developing countries may prove
useful for understanding the factors that may lead to successful
renewable energy enterprise, and the unique needs, market position
and market segmentation of end-users in developing countries.
A third avenue for future research is around the question of
whether renewable energy entrepreneurs in developing countries
have successfully adapted to, or avoided, competition from
incumbent utilities and other larger energy providers. (How) have
renewable energy entrepreneurs in developing countries part-
nered with incumbent utilities? A typology and characterisation of
the relationships between renewable energy entrepreneurs (and
small businesses) and incumbent utilities would improve our
understanding of whether such partnerships have had any success
in developing countries. Even further, a study comparing the
identified types to country-level indicators may enable us to better
understand the regional and institutional contexts that facilitate
such partnerships. The Country Institutional Profile (CIP) frame-
work developed in the entrepreneurship literature may be of
interest to renewable energy researchers, to be used in future
surveys to investigate the relationship between specific institu-
tional or country-level entrepreneurship parameters and various
renewable energy factors.
The informal norms and rules in particular developing country
contexts can indeed influence whether and how renewable energy
stakeholders choose to embark on entrepreneurship. It may
therefore also be useful to gain a better understanding of the effect
of a lack of value and respect for entrepreneurs on renewable
energy entrepreneurship. Are renewable energy stakeholders in
such contexts interested in entrepreneurship, and do they have
access to information on how to start a business? What skills do
they possess, and how can they be leveraged to start and manage a
successful renewable energy business?
Finally, it was found that policy and government support is
treated as an overarching challenge for renewable energy uptake
and entrepreneurship in developing countries. However, such
issues have not been addressed exhaustively, as there may be
room for future research that focuses on how suggested policies
might be effectively enforced, and the role of integrity and cor-
ruption in renewable energy governance in developing countries.
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