This post is a part of BioBiz’s Bio-CNG Perspectives.
BioBiz, a division of EAI, is a leading market intelligence & strategic consulting firm for the Indian bio-based sectors.
This blog post uses the terms bio-CNG and renewable natural gas (RNG) interchangeably.
Bio-CNG or bio-compressed natural gas, also known as sustainable natural gas or biomethane, is a biogas which has been upgraded to a quality similar to fossil natural gas and having a methane concentration of 90% or greater. As the gas is derived from natural and renewable sources, it is also termed renewable natural gas (RNG).
Bio-CNG is an emerging business opportunity. For early movers to have a competitive advantage, it is essential to have innovations across the RNG value chain. One immediate avenue could be through innovative business partnerships.
This blog post provides details on some emerging partnership opportunities.
Emerging partnership opportunities for RNG
- Offtake by the big firms
One emerging partnership opportunity for potential investors will be with large corporates that have the potential to be a large offtaker of RNG in future. It will take some time to form such partnerships; in addition, these corporates could require that the investor be of a certain size and scale before they can procure RNG. All the same, starting to cultivate partnerships with such clients and providing them with some value over a period of time until the investor reaches the threshold scale could be richly rewarding.
- Logistics partnerships
RNG companies have the option to own the entire logistics assets and network (both inbound and outbound) or arrive at outsourcing partnerships with 3PL (3rd party logistics firms). While the businesses could, in the beginning use own transport owing to small scales, as the scales and the complexity of logistics increase, it is recommended for the companies to explore effective 3PL partnerships.
- R&D partnerships
Natural gas can be used as a starting point to produce valuable products. For instance, natural gas can be converted into syngas (a mixture of CO2 and H2). Syngas is the starting point for the production of a wide variety of biofuels and chemicals, including hydrogen. In future, investors can consider producing these through effective R&D partnerships with Indian or international firms.
- Partnerships with NGOs and associations
Partnerships with NGOs and associations can play a significant role in enhancing the brand and credibility of potential investors, as well as provide excellent connections for business development
- Investment partnerships
With sustainable energy being on the radar of almost every type of investor, developing effective partners in the investment community will assist an entrepreneur in his expansion plans. Such partnerships could be either informal (providing intelligence assistance to the investment community on RNG and related domains) or formal (getting some of the key investment stakeholders on board).
- Sales channel partnerships
This will be a critical component in business development. While an investor could have a direct sales strategy in the initial stages as he is likely to be serving a few customers within a restricted geography, having a better designed sales channel strategy that utilizes both direct and indirect sales channels will be useful in later stages when the investor is considering expanding his customer base within the commercial and industrial sectors, or looking at targeting select B2C sectors.
RNG value chain is expected to have several innovative business opportunities in the form of partnerships and entrepreneurs could use these as avenues to have competitive advantage.
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