1. Launching EGG Franchises in Mvuti, Mbande, Bwama and Msanga

As explained in a previous post (“Can We Franchise EGG Services?”), we have decided to franchise the transportation and distribution of EGG’s batteries to store owners near certain customer populations.  Over the last few weeks, we interviewed and selected four franchisees, determined the fee that customers should pay to swap batteries at their stores and developed an operations manual to train the franchisees on various processes.  During EGG Retreat 2010, our team visited the stores to sign contracts with the franchisees and launch the sites.  The franchisees in Bwama and Msanga arranged large gatherings of current and potential EGG customers on the day that we visited their sites.  During these meetings, Yohana and Hussein made presentations about EGG’s service and announced to customers that they can now swap their batteries at a nearby storefront, instead of having to travel to our charging station in Chanika (or arrange for a neighbor or friend to make the trip on their behalf) as before.  The above picture captures the gathering in Msanga.

2. Improving Forms and Recordkeeping Processes

As EGG has expanded, we have begun to realize that some of our forms and ways of recording data can be improved.  We made several such improvements during the retreat.  For example, previously, we had separate sheets to record different types of battery movements to and from our charging station in Chanika.  We had a sheet to record customer swaps, a sheet to record the batteries that our electricians use for new installations and a sheet to record large transfers of batteries between our charging station and newly-launched franchises.  Last week, we designed a single form to track all of these types of movements.  This will help us more easily track the number of batteries at our charging station at any given point in time.

3. Implementing an IT System to Track Customer and Battery Information

Finally, during the retreat, Laurent began implementing an Access database to better track customer and battery information.  This system will be fed with the written records taken by our sales team and at the charging station and newly-launched franchises.  It will significantly improve our future operations.  For example, it will help us correct human errors, such as a franchisee recording a battery number incorrectly or accidentally giving a battery to a customer with an expired subscription.  In addition, it will  notify us if a particular battery has not been swapped in a certain period of time.  It will allow us to see who most recently had the battery, so we can inquire about its status and get compensated for any lost batteries.

There is a lot of work left to be done to finish implementing these changes, but the retreat definitely gave us a head start.  We hope to make such retreats a monthly or bi-monthly tradition, so look out for blog posts on EGG Retreat 2010 – Part 2!

San Francisco Gate

CSR wire

Planet Green: here and there

Earth2Tech: see here as well as this and that

Also, some press on Planetgreen here and there,
as well as an Honorable Mention at the Williams James Foundation Socially Responsible Business Plan Competition!

SOccket has attracted plenty of media attention, which is a bit of a mixed bag. On the one hand, anything that gets people thinking about the lack of power in the developing world is good. On the other, anything that gets people thinking that the solution is going to be something as telegenic as an electric soccer ball is bad.

Most people who have spent time in the trenches of development know that the real problems are crushingly un-catchy. In terms of difficulty, of trying to do something we just aren’t quite sure how to do, spurring development is up there with reforming healthcare, regulating the stock market, and coping with global climate change. It shares with those problems a combination of complexity and inscrutability.

A problem is complicated when it’s, well, complicated. Sending a man to the moon is complicated. A problem is inscrutable when it’s hard to tell what a “solution” would look like, or if one even exists. Living a good life is an inscrutable problem.

Complicated problems with clear end posts can be thrilling. No matter how difficult the path, the goal is always visible. That’s why, for example, tasks which might otherwise be considered drudgework become appealing when inserted into the highly structured, goal-oriented worlds for videogames.

Inscrutable problems devoid of technical complicatedity can be rewarding subjects for artworks or daydreams. Tolstoy for example threads a theory as to the proper interpretation of history through War and Peace, and of course Proust’s In Search of Lost Time is largely involved with an examination of how and whether personal identity persists.

It is when complexity and inscrutability collide, however, that truly mind-numbingly boring and hellacious problems are created. This is why you will never see a (successful) video game based around reforming the health care system, or a novel whose central conceit is an exploration of the melancholy truths revealed by the depressive effect of mark-to-market accounting standards on corporate balance sheets.

The question of how to spur development is surely both complicated and inscrutable (how does one even define the word development in this context?). As such the greatest strides forward are apt to be found in the least sexy of places.

EGG-energy sales team ready to go

EGG-energy’s approach is all about getting our sales people out of the office and where the potential customers are. We made several initiatives to support sales. First, to motivate the sales reps, each new, installed customer that he approached outside the station brings the rep a sizable bonus. Second, we built demo kits to demonstrate what the lights, switches and battery would look like inside the customer’s house.

Hussein and Jukka explaining the concept at the market

Finally, we did sales training, increased the amount of marketing materials handed out and are currently improving the link between closing a sale and having an installation scheduled. As the household decision maker is seldom home during daytime and closing the sale at site is difficult, we now collect phone numbers from prospects, and do follow up calls after they have had a chance to discuss the purchase with the right people.

Micah and Hussein demoing the product

Demand for electricity is driven by appliances and at the moment chargers for mobile phones drive many of the purchase decisions. High on our task list is sourcing new products for which our batteries provide enough power and which we can find at prices that suit our target group. A TV bundle by the world cup is a must!

The very first experiences from increased sales efforts are promising. First, the monetary incentive (up to some 50% of the monthly salary with good sales performance) seems to be an efficient motivator: sales people spend a lot of time doing house calls. Second, we have been winning over a very high percentage of our potential customers and have increased the traffic at the charging station significantly. Next few weeks will show how good we are at converting the increased demand to paying customers.

Jukka

Two recent announcements about new sources of funding specifically targeting access to clean energy sources have made me think of Coehlo’s charming novel and its teachings on heeding signs and embracing opportunities. Just last week, US Energy Secretary Steven Chu announced the launch of a new Renewables and Efficiency Deployment Initiative—Climate REDI—which aims accelerate the transfer of clean and renewable energy technologies to developing countries. In an effort to reduce greenhouse gas (GHG) emissions, fight energy poverty, and improve public health, the United States and other major economies, including Italy, Australia, UK, Norway, the Netherlands and Switzerland, have pledged $350 million to the program. Climate REDI will emphasize deployment of solar lantern and light-emitting diode (LED) technology, super-efficient equipment and appliances, sharing information, and scaling up renewable energy sources such as solar and wind systems.

Earlier this month, E+Co, an investment firm that provides business support services and investment capital to clean energy enterprises in Africa, Asia and Latin America, received two significant capital infusions: $7.5 million from the Norwegian Investment Fund for Development and $6.65 million from FMO, the entrepreneurial development bank of the Netherlands. E+Co’s current investment portfolio includes over 150 small and growing businesses from micro-hydro developers in Nepal and solar retailers in Nicaragua to efficient cook stove manufacturers in Ghana. E+Co. The organization anticipates that approximately 60% of the new capital will be invested in Sub-Saharan Africa.

These monetary commitments underscore the timeliness of EGG-energy’s recent pilot launch and the importance of the company’s mission to provide clean, adequate, affordable power to underserved communities in sub-Saharan Africa. Now, more than ever before, power companies committed to providing access to modern energy services have an unprecedented opportunity to help drive sustainable development in the poorest countries. I’m reminded every day of the catalytic effect that EGG-energy and our peer firms like D.light and dissignio can have on generating economic opportunity for our customers.

As the year comes to a close, a few other signs stand out, giving every reason for optimism.  The team is closing on pilot financing from an angel investor. Jukka is heading to Tanzania for January as an MIT Public Service Center fellow to bolster our sales and marketing strategy and to scope out new sites for EGG-energy’s charging stations. Another competition victory brought in an additional $25,000 in capital that will enable EGG-energy to jump start on expansion. We continue to push ahead and as we head into 2010, we remain consistently alert and eager to pick up on clues and cues, largely from the amazing network of EGG-supporters and allies.

Happy holidays everyone!

Alla

In general, hedging currency risk in Tanzania’s poorly developed capital markets is challenging. First of all, there are no publicly traded options for the Tanzanian Shilling. Buying options directly from banks is expensive as the currency is fairly volatile and as there isn’t significant competition among the existing issuers. We would also have to bear the counterparty risk which outside of the few global banks that operate there (like Citi) may be substantial. Moreover, the Tanzanian exchange market is both small and inefficient (monthly USD sales volumes are at $100m+) and consequently the interest rate parity doesn’t hold. This makes money market hedges and forward contracts resemble private bets more than anything else.

Our business faces two types of currency risks. First, as our inputs come from China, Europe and the U.S. and as our revenues are realized in Tanzania, the Shilling’s depreciation hurts our margins. Second, as we fund our operations from the U.S., a depreciating Shilling makes it difficult to repatriate earnings or to pay back loans.

To mitigate the first risk, we seek battery and charging equipment manufacturers within Tanzania and in neighboring countries (the correlation between East African currencies is surprisingly high), so that both inputs and outputs are in the same currency. Luckily, the price of our main competitor, kerosene, follows oil price, which, in turn, is dollar based. Thus, as the Shilling depreciates, both the cost of kerosene and that of our inputs increase. As a result, the prices of all the products in the market increase, and we may be able to have the end-customer share some of the increased costs.

The most efficient way to mitigate currency risk associated with the repatriation of money is to expand internationally. Instead of being dependent on the Shilling-US dollar relationship, we will then have a portfolio of currencies to work with. Although our position is, in this case, hurt by the correlation between currencies, rapid international expansion remains the best way to go.

What is the magnitude of EGG-energy’s currency risk? A depreciating event that with current volatility happens once in 20 years would eat 40% of our full-scale profits. Luckily there is no indication that the Shilling is grossly mispriced at the moment and no extensive correction is expected.

Shilling volatility: Five year trend – TZs vs. USD

Jukka

]]> http://egg-energy.com/blog/2009/12/hedging-currency-risk/feed/ 0 http://egg-energy.com/blog/2009/12/quick-fixes-can-go-a-long-way-to-offset-our-energy-needs/ http://egg-energy.com/blog/2009/12/quick-fixes-can-go-a-long-way-to-offset-our-energy-needs/#comments Mon, 07 Dec 2009 23:08:35 +0000 Manu http://egg-energy.com/blog/?p=298 The world needs more alternative energies and less polluting ones.  Here is a statement that more and more people agree to.  Some might ponder on ways to pollute less. Some might fight for the alternative energy cause.  And some might even act to alleviate their environmental footprint, by driving their car less, using energy-saving services or changing their light-bulbs.  To all these people I say: congratulations.  Congratulations for caring about our planet.  Congratulations for acting towards the common good.  Congratulations for inspiring other people.

Why am I mentioning this?  I recently stumbled upon a very interesting June 2008 article from the Economist, one of my favorite sources. (It is available to registered users at: http://www.economist.com/opinion/displaystory.cfm?STORY_ID=11580723&source=login_payBarrier.)

What is the article about?  Looking at our energy needs, the writer describes the need for a transformation of our energy infrastructure in order to face global warming.   The need for energy is real and current energy sources, such as oil or gas, cannot last forever.  Many bet on technology developments to replace them: solar, wind power, biofuels, electric cars.  Over time, their costs go down and economies of scale develop.  With the support of a carbon tax, these solutions could well replace one day fossil fuels and allow the world to cool down.

That might be true.  But why wait for this hypothetical wave of alternative energy cost reductions, economies of scale and worldwide availability, with their subsequent bottlenecks in materials, to address climate change?  Why not try to focus more on the quick fixes that are already available?

Faced with daunting challenges, we commonly think of radical solutions instead of focusing on the smaller yet more workable solutions.  However, these can take a worthy first stab at significant parts of the problem.  What can these quick fixes be?  We are surrounded by opportunities.  I am for instance amazed at the number of airports that run shuttles between their terminals.  They usually run on oil, 24 hours a day, at low speeds, with frequent stops.  Here’s a quick fix that could have a big impact: replace them with electrical shuttles, or natural gas ones if you really can’t put those wires together.  A small step in the grand scheme of things, but if every airport adopted eco-shuttles, local and global pollution could be seriously reduced. Likewise, if every one of us identified one small fix per year, and communicated it to others, there’s little doubt that a great deal of carbon emissions could be avoided.

Are all quick fixes good though?  No, they are not always as efficient as we would like them to, and careful prior analysis is needed.  For more on that topic, see “Business Owners Beware: Quick Fixes Can Cost More Than Smart Energy Savings Strategies”, http://www.greenerbuildings.com/news/2009/11/04/business-owners-beware-quick-fixes-can-cost-more-smart-energy-savings-strategies.

Where am I going with this?  To the solution we have developed at EGG-Energy of course, which is a quick fix!  How is it a quick fix?  Well, first the energy source and power delivery technology, batteries, are neither new nor revolutionary: we don’t need to wait for huge worldwide demand or economies of scale to develop and operate our service Second, we do not need to amortize it over such long periods as are required by wind or solar farms.  Rather, the novelty lies in a smart concept: making available electricity by packaging it into batteries and transporting it from power lines to energy-less areas through a clever supply-chain.  Here’s a quick fix.  And a quick fix that could have a great impact on the world

- Emmanuel