BioMassters Partnered with CCA to Fast-track Improvements to their Unit Economics
BioMassters, a Rwandan pellet-producing clean cooking company with more than 1,000 customers, partnered with the Clean Cooking Alliance (CCA) to engage with three consultancies helping to resolve strategic questions, identify changes to improve unit economics, and check for blind spots that have hampered other pellet-producers from achieving breakeven scale.
Between December 2021 and September 2022, CCA’s Venture Catalyst program coordinated the interlinking scopes of the three consultancies. Together, these three providers covered the complete picture of unit economics, from biomass sourcing to moving pellets from the factory gate to the customer.
“These very tailored feasibility studies have helped BioMassters to look at our business structure at commercial scale, the issue of sourcing raw Rwandan biomass, and the financial viability of increasing factory pellet production capacity.”
– Claudia Meunch, CEO, BioMassters
The first project was with TIL Ventures, a venture builder working with companies in new and challenging markets, was commissioned to run a three-day workshop to examine the overarching business model for BioMassters and to identify potential risks along their path to achieving breakeven and operating at utility-level scale.
The second project was with UNIQUE, a leading consulting firm in forestry, natural resource management, and rural development, investigated two large local biomass suppliers to help inform BioMassters’s upstream feedstock sourcing strategy. In partnering with Rwandan forestry firms ENABEL and SEAL, it is hoped that BioMassters could pave the way for replicating more partnerships between pellet manufacturers and local forestry companies in the future.
The third project was with FutureMetrics, a boutique consultancy in the wood pellet sector, undertook a financial analysis of BioMassters’s pellet production plans and modelled how different variables can affect projected unit production costs. As FutureMetrics typically consults for large North American and European power utilities, this project was their first time working with a clean cooking pellet company. This departure is a step in the right direction for encouraging adjacent sectors to be more aware of, and integrated with, clean cooking.
“FutureMetrics is proud to have worked with CCA and BioMassters on this triple-win project. We see this project as potentially contributing to better health, better ecology, and lower cooking costs for households that switch from stick wood or charcoal to pellets used in the high efficiency stoves.”
– Bill Strauss, President, FutureMetrics
Following the advice received from the three consultancies, BioMassters has made several changes to their financial model and operational strategy.
On their financial model, BioMassters has increased the price being charged to customers for a kilogram of pellets to a level that improves unit margins but maintains cost competitiveness with local charcoal vendors. In addition to price changes, BioMassters decided not to bundle the stove and pellets together into one monthly price, instead explicitly splitting pellet prices from stove prices to allow for easier accounting and tracking of stove financing. Field data has allowed BioMassters to use more accurate pricing assumptions for the sourcing and transportation costs of local ‘green’ biomass.
On their operational strategy, BioMassters has included a standard moisture level for sourced biomass in its sourcing contracts. This way, seasonal weather changes and inevitable rainy seasons do not negatively impact the overall cost paid per tonne. BioMassters has made informed decisions about: where, when, and how to cost-effectively process raw biomass before turning it into pellets; reducing heating and transportation costs; and improving unit economics. BioMassters has also commissioned UNIQUE to train local forestry staff on techniques to improve future biomass yields, from which BioMassters will benefit in the years ahead as the company looks to scale.
Following this partnership, BioMassters is poised to significantly grow their customer base and expand their reach as the leading pellet-producing clean cooking company in Rwanda.