Ideas from Lighting Africa 2010

Last week, Jamie, Laurent and I attended Lighting Africa 2010 in Nairobi, Kenya.  Lighting Africa is an annual conference and trade show on off-grid lighting in Africa.  It is attended by representatives from government, academia, multi-national organizations, non-profits, private companies and energy service providers.

The most notable (and unexpected) part of the conference was its focus on solar devices.  Though I expected the conference to cover a variety of off-grid lighting solutions (such as off-grid power plants, battery services and human-powered solutions), solar devices was the topic of a majority of the presentations that were made.  Indeed, during the opening speech of the conference, a representative from Tanzania’s Rural Energy Agency said that the purpose of the conference was “to figure out how to make solar devices more affordable to the poor.”  In addition, a majority of the companies with exhibition booths showed variations of solar-powered LED lanterns.

Despite this, there were several ideas presented during the conference that were interesting and relevant to EGG:

• Schneider’s Battery Distribution Model
• Using Micro-Finance to Help Entrepreneurs
• Providing Services beyond Lighting

Schneider Battery Distribution Model

Schneider Electric, a global electrical equipment company based in France, recently started distributing LED lights in rural India.  The lights are powered by batteries that can be charged by the grid or a solar panel.  Schneider sells a package consisting of batteries, a charger and a solar panel to rural entrepreneurs.  Customers who have purchased LED lights but cannot afford their own batteries and chargers subscribe to an entrepreneur’s battery rental service.  The entrepreneur rents batteries to customers and swaps them every day at customers’ homes.

There are several interesting aspects of this model.  First, all parts of the business (battery ownership, charging, transportation and distribution) are sold to entrepreneurs.  While EGG is currently considering franchising the transportation and distribution of our batteries (See entry below entitled “Can We Franchise EGG Services?”), we might also want to consider selling our batteries and the charging portion of our business to franchisees in the future.

Another interesting aspect of Schneider’s model is that its entrepreneurs swap customers’ batteries every day, regardless of how much they have been used.  The advantage of this is that it prevents customers from overusing batteries and reducing battery life.  This model might not work in areas less dense than India (such as Tanzania), as transportation costs would be too high.  We might want to consider other ways to prevent our batteries from being overused though, such as requiring customers to swap their batteries every three days or using battery indicators.

Using Micro-Finance to Help Entrepreneurs

During a session entitled “End-User Finance for Off-Grid Lighting”, a few speakers made the point that the goal of companies at the conference should not be to reduce the quality of our products and services to make them affordable to the poor, but to partner with micro-finance institutions (MFIs) to make quality products and services more affordable.  There are two main issues with this idea.  First, most lighting products and services (including those presented at the conference and even EGG’s battery subscription service) fall below the lending range of typical MFIs.  Second, for better or worse, MFIs usually need to see that a loan they make to a customer has real potential to increase his / her income.  This might be harder to establish if the customer is using the loan to purchase a lighting product or service.  The speakers did mention using MFIs to help entrepreneurs (such as those used by Schneider) afford a large package or quantity of a product.   This idea would not meet with the two issues mentioned above.  If we decide to sell EGG’s batteries and chargers to franchisees in the future, we might consider using MFIs to make it more affordable.

Providing Services beyond Lighting

Finally, on the last day of the conference, a speaker from the Solar Energy Foundation argued that it is unreasonable to expect customers to be satisfied once their need for lighting is fulfilled.  He said that in many cases, it is other services (such as cell phone charging and radios) that attract customers and that lighting is simply an added bonus.  He encouraged conference participants to think beyond lighting and begin offering TVs, fans and other electricity-powered devices that customers demand.  From my experience in the field, I agree with this assessment, especially regarding the demand for TVs!  In fact, the EGG-team has started developing a battery-powered TV prototype, and this will be the topic of my next blog post.  The only question is: will we be on time for the June 11^th start of the first African World Cup?