This $6-A-Month Plan Brings Solar Power To People Living Off The Grid
People talk about a flash of inspiration. But Xavier Helgesen's eureka moment came in the dark.
A few years ago, the American entrepreneur was traveling through Malawi to meet with clients for his book-selling company, Better World Books. He stopped in Monkey Bay, a town of about 30,000 people, to spend the night. What made this place unforgettable, he says, was that it was "100 percent off-grid."
The streets were pitch black. People carried kerosene lamps to walk around at night. When a family invited him to dinner, they all huddled under one dim light. "It was amazing," he says, "to see that was how everyone lived."
And that's when Helgesen, 38, who was just starting to learn about solar energy, had his bright idea: "If anybody needed solar power," he says, "it was the people living off the electricity grid."
Helgesen harnessed that idea, and today, is the head of Off-Grid Electric, a for-profit solar energy company that provides affordable electricity service for people in Africa who are off the grid. He started Off-Grid in 2012 with Erica Mackey, a classmate at the University of Oxford's business school. Off-Grid has reached more than 100,000 households and hired 800 of its 1,000 workers in Tanzania. This year, it's expanding to Rwanda. The goal to reach 1 million homes in Africa by 2017.
In countries like Tanzania, citizens who lack power may have to wait years for the government to build up the grid and plug them in. And they'll pay for the privilege.
By contrast, Off-Grid's customers can power up their homes for as little as $6 a month. When someone signs up for a system, there's a $6 fee for Off-Grid to install solar panels and a meter to monitor their energy usage, along with LED lights, a radio and a phone charger that all work off the solar charge. It only takes a few hours. Then customers pay about $6 a month to access the power they need — about what they'd be paying for kerosene for home energy.
USAID is a big fan. Citing the group's "tremendous progress providing access to clean and reliable light and electricity," USAID launched a $36 million joint Power Africa and U.S. Global Development Lab effort this week. The money will be used to fund projects like Off-Grid's to 20 million households across sub-Saharan Africa.
The company itself has grown rapidly in the past year. Off-Grid has been a favorite for funders, securing $45 million from stakeholders in December 2015 to expand the company. And in January, it won the Zayed Future Energy Prize for its creative, "massively scalable" business model.
"There's a unique opportunity right now in Tanzania. You have a conflation of a number of important factors: A largely rural population with a low electricity rate, the availability of solar technology, which has improved over time, and technologies to ensure people can pay for their services," she says.
"Off-Grid Electric tapped into their innovative approaches to reach people without electricity who live in rural areas," she adds.
So how did they do it? Goats and Soda interviewed Helgesen this week to find out.
Talk about appliances, not watts
Some solar companies tell potential customers, you'll be purchasing, say, 80 watts for your home. But it's confusing to sell electricity when you talk in watts, says Helgesen. Instead, Off-Grid reps talk about how many appliances in your home you can power. "We have gone to a lot of homes that surprisingly have electrical appliances that they got for wedding gifts, but no electricity," he says.
So Off-Grid asks their customers which appliances they want to power up — then designs a package based on their specific needs. If they need to buy certain devices as well, like lights or a radio, Off-Grid can add those to the package, too.
Find out what people really want
For many of Off-Grid's clients, their No. 1 wish is for electricity to run a phone charger. When Helgesen realized that most of his potential customers have cellphones but need to go to a charging station to power up, he decided to include a USB cellphone charger in the entry-level package.
"Phone charging is a crucial application," he says. "People can get by without lights, but not being able to charge your phone — there's no substitute for that."
Pay as you go
Customers might be intimidated by the idea of a monthly bill for 24/7 electricity, so Off-Grid customers pay for power as they use it, relying on mobile payment apps like M-Pesa. "Just like prepaid mobile throughout Africa and India, our customers pay us daily for the use of their solar system," says Helgesen.
Your customers will let you know when you get it wrong
One thing Off-Grid tried that tanked? Getting fishermen in Lake Victoria to switch from using kerosene lamps to solar-powered lights at night. The fishermen use the lamps to attract fish to the surface of the water to catch them. "We failed," he says. "Kerosene is very warm light — which is what fish are attracted to — and solar is cold light. The fishermen were not impressed."
Keep in mind: The customer is always right
The team saw that many villagers displayed their new solar-powered light fixtures on their porch, leaving the inside of their homes dark. It was because they wanted others in the community to know they had electricity — a local status symbol.
Instead of trying to convince them to keep the lights inside, the company came up with a light to meet this need: "We designed a custom fluorescent tube light — seen as very modern and functional in this part of the world — and made it three times as bright as the indoor light," says Helgesen. "It's meant to be used outside the home." These lights can be purchased and included in a customer's energy package.
This week, Off-Grid announced a new program called "Kazi na Zola," a collection of solar appliances like phone charging strips, entertainment systems and hair clippers designed to help rural entrepreneurs generate income. "We give them a simple business plan," says Helgesen, to run a phone-charging shop, barbershop, bar or restaurant. "We tell them: Here's how many haircuts you'd have to do a day, phones you'd have to charge a day to pay for your system. Anything above that — that's your profit."
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