My name is Hugo Niccolaï. I am a French chemical engineer specialized in the design and implementation of renewable energy technologies. I joined the EGG-energy team in Tanzania on January 7th after having worked with social enterprises in Laos, Indonesia and Bangladesh. In this first post, I would like to share with you my previous experiences related to improving access to power for the world’s BoP, and explain why I decided to work for EGG-energy.
My work for EGG-energy is part of a 2 year project, EnR’Sud (http://enrsud.posterous.com/), which I designed for a year before setting off to work for 5 different social organizations specialized in Decentralized Rural Electrification (DRE) in South-East Asia, Africa and South America. EnR’Sud stands for Energies Renouvelables’ Sud, which is French for Renewable Energy – South. Its sponsors include French companies active in the energy sector such as Schneider Electric and électricité de France (EDF), a group of engineering schools named l’Institut National Polytechnique de Toulouse as well as other institutions and private companies (http://enrsud.posterous.com/pages/les-partenaires).
My goal for the EnR’Sud project is to learn from successful DRE companies and projects around the world so as to create and distribute tools and methods that will make the multiplication of DRE initiatives easier, and which will stimulate the development of new entrepreneurial approaches from DRE applications. The biggest challenge of this study is to compare and contrast the factors that were essential to the success of these social enterprises in developing sustainable market-based solutions to the social and economic problems faced by rural people in remote areas.
2011: South East Asia
Let me introduce you to the three companies I have worked for in 2011. They represent 3 different approaches dedicated to the same purpose.
Created in 1996 by Muhammad Yunus as one of the « Grameen Sisters » – social companies that satellite around the initial micro-credit institution, the well-known Grameen Bank (http://en.wikipedia.org/wiki/Grameen_Bank) – Grameen Shakti (GS) was established as a « Social Business » with the aim of promoting the use of affordable, clean, modern, and sustainable energy technologies by the people of rural Bangladesh.
Individual solar home systems (SHS), biogas plants and improved cook stoves are their three main products proposed to their customers.
Grameen Shatki’ business model is based on micro-credit: the beneficiaries have different payment options from a 100% down payment to a 3 years payback period. This loan is provided by a Bangladeshi financial institution supported by the World Bank (IDCOL, Infrastructure Development Company Limited), but it is GS that collects monthly payments made by the end beneficiaries and is accountable for paying back IDCOL. In addition to making the larger loan, IDCOL subsidizes a small % of each system.
In order to be as close to its customers as possible, GS operations are divided over more than 1,200[1] offices, from the Head Quarter located in Dhaka to Divisional, Regional and Branch offices in all regions of Bangladesh. With more than 10,000 employees and 20,000 SHS installed per month, GS became financially sustainable within 4 years of its operations. The rapid expansion of its programs as well as their choice to localize services at the community level helped them drive costs down.
Sunlabob (http://www.sunlabob.com/) is a Lao commercial company. It was set up in 2000 by its current CEO, Andy Schroeter, and has been licensed for power operations since 2001. It offers renewable energy products and provides commercially viable energy services to remote areas, focusing on places that the national electricity grid will not reach for many years.
Sunlabob Renewable Energy Co Ltd. is well known for its expertise in solar lanterns projects, its core business since the creation of the company. However, with today more than 70 employees, the company provides a much wider range of services in urban and off-grid rural areas. On-grid solar installations, water-pumping and water treatment systems, solar lanterns and individual solar home systems, and micro hydro power plants are part of their current product portfolio. Since 2008, when Sunlabob launched an Energy Efficiency department, the company has been not only focusing on rural areas, but also working with urban ones, conducting energy audits, energy efficiency consultancies for buildings and factories, and supplying and installing energy-efficient materials.
Sunlabob projects in off-grid areas are divided in three categories: solar lantern stations financed by international development aid institutions (http://www.sunlabob.com/solar-rechargeable-lamps.html), rural electrification tenders (mainly to implement thousands of solar home systems in developing countries), and individuals or organizations (conducting development projects in rural Laos) that need Sunlabob’s renewable energy services. Sunlabob’s expertise in international tenders is more and more recognized thanks to a strong engineering department and a permanent tender team of several employees.
Sunlabob’s business model is different from Grameen Shakti’s in the sense that they don’t solely rely on their own rural electrification model, the solar lanterns, but propose many renewable energy services adapted to a wide range of clients. After many years of experience with solar lanterns, they decided to focus on quality, sustainability, and maintenance of the systems, and not charge the end-users. Indeed the hardware, training and installation are 100% financed by international organizations (NGOs, foundations, governmental institutions…) but Sunlabob has developed an innovative solution to ensure the capability of the beneficiaries to maintain the equipments properly during the overall life of their system by themselves.
This solution is a simple business model, based on a fee-for-service concept. Kerosene lamps are replaced with high-quality solar lanterns and a very simple charging system that doesn’t require any prior knowledge in electrical engineering. The Sunlabob business model provides opportunities for micro-enterprise formation in the villages and clean energy distribution.
Paris Manila Technology Corporation (PAMATEC, http://www.pamatec.com.ph/) is a French-Filipino corporation founded in 1988 by Hubert d’Aboville. PAMATEC, historical distributor and installer of electrical equipments, is today specialized in the fields of Power Distribution, DC Power Systems & UPS, New Renewable Energy, Weighing Scales and is involved in different special projects, such as Rural Electrification, Traffic Management Systems and Diesel Powered Mini Grids.
From 2004 to the end of 2009, PAMATEC implemented its first large-scale rural electrification project, the Philippine Rural Electrification Service (PRES) project. PRES is considered as the largest countryside power project in the Philippines. Thanks to a partnership between the governments of Philippines and France, the project brings electricity to 18,000 households in the province of Masbate, one of the Philippines’s poorest. PRES was implemented by PAMATEC with a French corporate partner, ETDE (Groupe Bouygues). The 17.5 Million € needed by the electrification component of the program was financed by the Filipino-French protocol. Aside from this, PRES offered basic services such as lighting for “barangay” halls and school buildings, provision of vaccine refrigeration and lighting for rural health units as well as provision of streetlights to major thoroughfares. Electricity was provided via the installation of mini-grids powered by diesel and photovoltaic (PV) systems (respectively 12,800 and 5,200 connections). The maintenance costs are supposed to be covered by monthly payments from the customers.
While rural electrification is GS and Sunlabob’s core business, it is not PAMATEC’s. They got the opportunity to jump into it by being the link between French and Pilipino governments for this huge project. Since then they decided to incorporate it to their main activities and have participated to several tenders inside the Philippines.
What I learned from these companies and what I wish to learn from EGG-Energy
Each experience was unique and each model I discovered has its own strengths and weaknesses. In Bangladesh, I saw a company as no others in rural electrification: more than 3.5 million beneficiaries in early 2011, a micro-credit system well managed thanks to the Grameen Bank influence in the country, and a geographic organisation of the offices optimizing sales, marketing and technical supports to be as close as possible to the customers. The company has created a business model that matches perfectly the characteristics of the country it serves: a small and flat land with one of highest inhabitants density in the world.
Having worked for nearly 7 months as Sunlabob’s Solar Lanterns project manager, I was able to see what factors govern the dynamics of these social companies created by foreigners. As many people come for missions between 6 months and 2 years, it is difficult to build a good and durable team spirit. Andy Schroeter succeeds in that sense by creating a strongly motivated local staff in all departments of the company. Working regularly with the technical team I could see how enthusiastic and proud they were to work for a social company like Sunlabob. With all the skills they learned on renewable energies throughout the years and their motivation to participate to the company’s expansion, the success of professional installations is guaranteed.
An other key factor Sunlabob understands after many years working on rural electrification projects, is to provide the simplest technology possible in association with the most reliable and high quality products: changing their home made lantern to the Phocos Pico Lantern is a good illustration of this strategy. Note that the recent arrival of Northern big companies such as Schneider Electric or Phocos in this market enables the creation of high quality products at an affordable price. This is one of my biggest observations last year, as I also observed it in Grameen Shakti buying large quantities of Schneider Electric LED lights.
Why EGG?
When I discovered EGG-energy 18 months ago, I was really enthused and wished to incorporate it to my EnR’Sud project for many reasons. The two major ones were the following:
First, their business model is based on a service that people from the BoP can afford to pay themselves. With 80% of the population living within five kilometers of a transmission line and less than 15% having access to electricity, EGG-energy’s model is completely in line with the Tanzanian context.
Second, after having worked for companies with more than 10 years of experience, I loved the opportunity to join a dynamic start-up 100% focused on rural electrification. I hope this helps me better understand the challenges faced to succeed in this domain!
I will be reporting from time to time on the EGG initiatives that I will be involved with – It’s already been a busy month, and I look forward to the coming ones!
Till then,
Hugo.
[1] All numbers date from early 2011.
