EGG-energy

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

EGG-energy’s hard work has paid off once again! The US team has been working on multiple submission deadlines for the Pace Pitch Contest (www.pace.edu/pitch ) since early October, and Mark Yen and Rhonda Jordan have been rigorously training for the pitch for a couple weeks now. Bruce Bachenheimer, Pace Pitch Contest Director, welcomed the two in New York City on December 3rd along with nine other finalist teams. The keynote speaker was Iqbal Z. Quadir, Founder and Director of the MIT Legatum Center for Development and Entrepreneurship (http://legatum.mit.edu/) – so the finalists had a tough act to follow. All of the finalists gave well-organized pitches to the panel of judges, but EGG-energy stood out.

Mark Yen delivered a compelling pitch and COO, Rhonda Jordan, answered the judges’ questions. The two were able to demonstrate what makes EGG-energy unique: the company (1) addresses a very pressing need experienced by over a billion people in the world today (a lack of access to electricity) (2) offers a solution that is much safer and reduces carbon emissions by over 130,000 tons over the next 10 years (3) offers a solution that is more than 30% cheaper than alternatives (4) offers local employment opportunities  and (5) is profitable.

Congratulations to the EGG-energy team!

Rhonda Jordan (left center) and Mark Yen (right center) along with Pace Pitch Contest Director, Bruce Bachenheimer (far left) and Coordinator (far right).

EGG-energy is for-profit, and proud of it. In fact these days making money in the developing world is often seen as a point of pride. The idea is that if you are giving something away – whether it’s bed-nets or condoms or even drugs – there is always the worry that your organization might be simply flooding the countryside with goods that are either useless or not valued by their intended beneficiaries (and thus not used properly – witness the free textbooks that were distributed to children in a town I once lived near in a very poor area of Africa. Soon after being given out they began showing up for sale in the market, pawned by the children’s parents). The feedback loop between company and customer that is the backbone of capitalism is lacking. Whereas if you sell something for fair market price, and manage to make a profit doing it, then obviously you are providing your customers with something they need and value. They wouldn’t pay for, say, mobile phones if the phones weren’t giving them more bang for their buck than any previous alternative. Thus, if you sell something to a poor person, you are doing good. QED.

Right? Well, no. Here are four ways in which for-profit development can go wrong. We at EGG-energy hope to give them as wide a berth as possible, but these are tough, non-obvious questions that any social enterprise is going to have to struggle with at some point, and sometimes struggle hard:

1) Externalities. Both companies and people tend not to attach enough value to the damage (or sometimes good!) their decisions do to people outside the loop of buyer and seller. This can complicate, for example, the sale of antibiotics to farmers who might benefit from their use, while at the same time potentially speeding the development of resistant bacteria. The reverse problem occurs with mosquito-repellant-treated bed-nets: they not only reduce incidence of malaria in their users, but in the entire area in which they are used. But how can you charge someone for a benefit to their neighbor?

2) Discounting. People discount things – good things and bad things – that will happen in the future. They discount them a LOT. That’s why smoking exists. For many products, the present benefit is clear – but you have to ask whether there is going to be a future harm, and if so, whether consumers are taking that future harm properly into account when they buy the product. Are companies that sell cigarettes to the citizens of the developing world doing a good thing? A much more controversial version of this question can be posed to microfinance institutions. Are their customers properly discounting the pain involved in paying back their loans? And if not, can we be sure that the service provided is beneficial?

3) Human frailty. We are starting to understand a little bit about what makes people happy. One finding: people have no idea what makes themselves happy. It turns out that we are about as good at choosing courses of action that guarantee future happiness as would be a random spin of the action wheel. In a sense this is a problem for capitalism as a whole, and thus the answer might be “it might not work so great, but it’s better than the alternatives”. But if you are starting an enterprise whose goal is not only to make profits, but to make your customers better off, what do you make of the idea that your customers might have no idea whether or not buying your products actually does make them better off?

4) Agency issues. Often in life the person who makes the money doesn’t spend the money. This is particularly true in strongly patriarchal cultures in which the male head of the household might control an income derived from several wives and children. This patriarch might be great at choosing to buy products that benefit him, while not so great at buying products that benefit his family.

As these issues hopefully show, being for-profit is not a magical bullet that guarantees that an organization will necessarily accomplish the positive change it is dedicated to. Of course, they don’t show that it’s impossible either. It’s just that, like so many things in the realm of development are… it’s hard. We hope to do our best.

- Ben

After 6 months of written submissions and valuable interactions with a great team of mentors, today was EGG-energy’s big day: Rhonda and Jukka brilliantly pitched our business proposition to a mesmerized audience at Massachussets State House in Boston.

The only company to innovate without offering a brand new technology, we ranked an amazing 3rd place in this highly competitive contest. That feels good!

Press:
- earth2tech.com
- masshightech.com
- wickedlocal.com (on the semifinals)

- Blandine

EGG-energy’s opening day in Mvuti was a great success. We signed up eleven customers, completed five installations, and took in Tsh. 637,000 in revenue (480 USD). Interest is strong, and many additional orders were promised.

The day got off to a rocky start, with the wheel falling off of the car.

After catching rides in a dala-dala and a very dilapidated taxi, we made it to Mvuti to sign up our first customer.

We’ve done a range of installations, from a single light to six lights (two batteries). The lights are typically used in the common room, bedrooms, the shop, or outside for security. Almost all of the customers purchased a mobile phone charger. Here are a few pictures of our happy customers after their electricity was installed:

And finally, a very tired EGG-energy at the end of the day, outside of our first distribution center in Mvuti.

We are learning a lot about how to make this business efficient and scalable and are looking forward to sharing these insights with you. More to come soon!

–Jamie

Over the last few weeks we’ve been gearing up for the opening of our pilot site in Mvuti. This last Monday we conducted an informational meeting detailing our service offering and pricing. After I introduced the EGG-energy team in my broken Kiswahili, Hussein presented the business to the community.

We quickly disseminated 200 pamphlets that day. Here is one sheet of our three-fold pamphlet, including the cover (right), the frequently asked questions (middle), and the inside flap with the summary of our service (left).

After the meeting, we conducted a survey of our feasibility study customers to determine how much their energy expenditures have changed since starting with EGG-energy 2 months ago. The results were very encouraging:

• Kerosene usage for lighting in most homes went to zero
• EGG-energy saved its customers an average of Tsh. 1800 per week on energy expenditures for lighting, radio, and mobile phone charging. This is an annual savings of Tsh 90000 ($70), more than enough to cover the cost of the installation and battery subscription.

Our supply room is stocked, batteries charged, user manuals ready, receipts printed. EGG-energy is open for business Monday November 2nd!

–Jamie

Access to affordable energy is one of the greatest challenges that countries face today in creating sustainable growth. This point was highlighted by two of the latest visitors to MIT’s campus. The first was William Kamkwamba (whom Ben previously blogged about), who built a windmill from junkyard parts at age 14 with no formal engineering training. The second was President Barack Obama, who came to campus to talk on the topic of “American leadership in clean energy.”

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This week I took a picture of one of EGG-energy’s first battery deliveries by bike. Hussein is bringing a battery to Mama Kanoga’s guest house, where we installed our 8th test system.

The battery is strapped in place by rubber straps cut from tire tubes. I’ve seen these straps used to make sandals whose soles were made from worn tires.

We aim to take advantage of supply chains that already exist in Tanzania, to use techniques that are tried and true by local delivery providers. Bikes are used extensively in rural Tanzania, and can handle an amazing range of cargo. Here’s someone transporting concrete blocks (note how flat the back tire is).

And here’s a picture of charcoal transport by bicycle. Often the bicycle is used as a cart to be pushed up hills, but I’ve seen people pedal with loads as impressive as this one.

Of particular interest to EGG-energy is the transport of fragile eggs. Along Nyerere Road in the morning, you can see bicycles carrying hundreds of eggs into the city center. I haven’t been able to get a good picture of this, but found one on this blog:

http://blogs.dfid.gov.uk/2008/10/cycling-proficiency/

Though we (by we I mean us folks from “western” countries doing “development work”) tend to think of ourselves as bringing technology and knowledge to Africa, I expect many of EGG-energy’s solutions will be home-grown.

–Jamie

Yesterday afternoon, I was listening with Clélia to the “Bedtime Stories” CD that her father bought in London. I’m not sure that my two and a half month old daughter fully appreciated the narrative that led the donkey, the dog, the cat and the cockerel on their way to be musicians in Bremen to chase thieves out of a hidden cottage, but the seven children of the farmer’s wife whose big pancake ends up being eaten by a pig reminded me of how special the number 7 is.

1987, 1997 and 2007 were all remarkable years for green, cleantech, carbon cap and trade, global climate change and Kyoto to become respectable household words.
1987: birth of sustainable development as a concept (Brundtland Commission’s Report)
1997: commitment by industrialized nations (minus the USA) to lower their greenhouse gas emissions (Kyoto Protocol)
2007: formal acknowledgment by the international community that anthropogenic emissions of greenhouse gases cause climate change (IPCC’s 4th assessment report).

It took more than 30 years to make the case for businesses to plan their long term growth in a carbon-constrained economy so clear that the oldest consulting firm in the world, Arthur D. Little, recently cautioned against not doing so. Yet, “carbon” (and all the environmental externalities that it has come to represent – remember acid rains, mercury contamination, dead rivers and chemical dumps?) is only one of the three sustainable development stool’s legs. The economic crisis that unfolded in 2008 brought the “economic leg” on the front scene, but what shall we do about the “social” one?
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This article from www.good.is is about William Kamkwamba, a young man who as a 14-year old built a working windmill in his rural village in order to provide electricity for his family. It’s a great story with a happy ending, and an example of the awe-inspiring ingenuity that you often come across in places where things taken for granted in the US (turning on a light with the flick of a switch) are still precious and desperately longed-for.

- Ben