The Race to Solar-Power Africa – The New Yorker

Despite Off-Grid’s Silicon Valley vibe, it faces challenges unfamiliar to software companies. Aidan Leonard, Off-Grid’s Arusha-based general counsel, told me that the company “requires a lot of people walking around selling things and installing things and fixing things. There’s a lot of hardware—someone’s got a physical box in their house, and a panel on the roof, and they have to pay for it on a monthly basis.” Poindexter, of Black Star, put the problem more bluntly. “We’re a utility company,” she told me, and utilities are a difficult business.

In America, utilities are burdened with infrastructure, such as the endless poles and wires that come down in storms. Off-Grid doesn’t have to worry about poles, and the wires only run a few feet, from panel to battery to appliance. Still, the company is working with technology that is brand-new and needs to be made cheaply in order to be affordable. When solar energy first came to Africa, it was expensive and unreliable. Arne Jacobson, a professor of environmental-resources engineering at Humboldt State University, in California, is a couple of decades older than most of the entrepreneurs I met in Africa. He got his doctorate studying the first generation of home solar in Kenya, in the late nineteen-nineties. “In Kenya, I was trying to understand the quality of the panels that had started to flood the market,” he said. Much of the technology had “big troubles. Chinese panels, panels from the U.K., all this low-quality junk coming in. Later, L.E.D.s that failed in hours or days instead of lasting thousands of hours, as they should. People’s first experiences were often really bad.”

Jacobson has spent his career in renewable energy; he helped build the world’s first street-legal hydrogen-fuel-cell vehicle, in 1998. He now runs Humboldt’s Schatz Energy Research Center. (“You want to know why a lot of early solar research happened in Humboldt?” he asked me. “Because there were a lot of back-to-the-land types here, and they had cash because they were growing dope.”) After seeing the unpredictability of solar technology, he created, in 2007, what he calls a “de facto consumer-protection bureau for this nascent industry.” The program, Lighting Global, which is run under the umbrella of the World Bank Group, tests and certifies panels, bulbs, and appliances to make sure that they work as promised. Jacobson credits this innovation with making investors more willing to put their money into companies such as Off-Grid, which has now raised more than fifty-five million dollars. His main testing lab is in Shenzhen, China, near most of the solar-panel manufacturers. He also has facilities in Nairobi, New Delhi, and Addis Ababa, and some of the work is still done in the basement of his building at Humboldt, where there’s an “integrating sphere” for measuring light output from a bulb, and a machine that switches radios on and off to see if they’ll eventually break.

Because many of Off-Grid’s potential customers have experience with bad products, or know someone who has, the company takes extra steps to build trust with its clients. After an Off-Grid installer shows up on his motorbike, he opens the product carton with great solemnity; in an Ivorian village, I watched along with seventeen neighbors, who nodded as the young man held up each component, one by one. He then climbed onto the roof of the house, nailed on a solar panel about the size of a placemat, and used a crowbar to lift up the corrugated-tin roof to run the wire inside. He screwed the battery box to the cement-block wall and walked the customer through the process of switching lights on and off several times, something the man had never done before. The company also offers a service guarantee: as long as customers are making their payments, they can call a number on the box and a repairman will arrive within three days. These LightRiders, as the company calls them, are trained to trouble-shoot small problems. They travel by motorcycle, and if they can’t make repairs easily they replace the system with a new one and haul the old unit back to headquarters.

This sales-and-installation system presents some engineering challenges. When the company expanded into Ivory Coast, last year, it had to redesign its packaging to fit on the smaller motorcycles used there. It also runs into problems coördinating coverage across a vast area where most houses don’t have conventional addresses. “We had to build our own internal software to make it possible,” Kim Schreiber, who runs Off-Grid’s marketing operations in Africa, said. “We optimize, via G.P.S. coördinates, the best routes for our riders to take. The LightRider turns on his phone every morning, and he has a list of his tasks for the day, so he knows what parts to take with him.”

Solar companies also contend with the complexity of the mobile-payment systems. In Ghana, where many customers don’t use mobile money, Poindexter’s Black Star team instead sells scratch cards from kiosks, which give customers a code they need to enter on their meter box to top up their account. Off-Grid delivers these codes over the phone, but the company still needs a call center, manned by fifteen people, to help customers with the mechanics of paying. Nena Sanderson, who runs Off-Grid’s Tanzanian operation, showed me the steps entailed in paying a bill through a ubiquitous mobile-money system called M-Pesa. There are ten screens, and the process ends with the input of a sixteen-digit code. “And I have a smartphone,” she said. “Now, imagine a feature phone, and imagine you may not know how to read, and the screen is a lot smaller, and it’s probably scratched up. Mobile money is a great enabler, but it’s not frictionless.” One of Off-Grid’s competitors, PEGAfrica, has printed the whole sequence on a wristband, which it gives to customers.

Because one of the biggest obstacles to the growth of solar power in the region is the lack of available cash, many of these companies are essentially banks as well as utilities, providing loans to customers who may have no credit history. That can make it hard to figure out what to charge people. “What you see in this space is at least eight to ten decent-sized pay-as-you-go solar companies, all trying to parse through what the actual end price to the customer really is,” Peter Bladin, who spent many years in leadership roles at Microsoft and now invests in several of these firms, told me. Bladin first started studying distributed solar—solar electricity produced near where it is used—in Bangladesh, where the Nobel Prize winner Muhammad Yunus used his Grameen microcredit network to finance and distribute panels and batteries. Lacking that established financial architecture, companies in sub-Saharan Africa are constantly experimenting with different plans: Off-Grid began by offering ten-year leases, but found that customers wanted to own their systems more quickly, and so the payments are now spread out over three years. PEGAfrica customers buy their system in twelve months, but the company gives them hospitalization insurance as a bonus. Black Star is a true utility: the customers in the communities where it builds microgrids will always pay bills, but the charges start at only two dollars a month. (The business model depends on customers steadily increasing the amount of energy they buy, as they move from powering televisions to powering small businesses.) Companies like Burro—a Ghanaian outfit launched by Whit Alexander, the Seattle entrepreneur who founded Cranium games—sell lamps and chargers and panels outright, saving customers credit fees but limiting the number of people who can afford the products.

This uncertainty about the most practical financial model reflects the fact that in sub-Saharan Africa there is a great deal of economic diversity, both between countries and within them. One morning, I found myself walking down a line of houses in the Arushan suburb of Morombo. At the first house, a two-room cinder-block structure with a broken piece of mirror on one wall, a woman talked with me as we sat on the floor. The home represented a big step up for her, she said—she and her husband had rented a place for years, until they were able to buy this plot of land and build this house. She had a solar lantern the size of a hockey puck in her courtyard, soaking up rays. (Aid groups have distributed more than a million of these little lamps across the continent.) She assured me that she planned to get a larger solar system soon, but, for many of Africa’s poorest people, buying a lantern is the only possible step toward electrification.

Next door, a twenty-six-year-old student named Nehemiah Klimba shared a more solidly built house with his mother. It had a corrugated-iron roof on a truss that let hot air escape, and we sat on a sofa. Klimba said that, as soon as he finished paying off the windows, he was going to electrify. He and his mother were already spending fifteen dollars a month on kerosene and another four dollars charging their cell phones at a local store, so they knew they’d be able to afford the twenty dollars a month for a solar system with a TV.

One door down was the fanciest house I’d seen in weeks. It belonged to a soldier who worked as a U.N. peacekeeper, and the floors were made of polished stone. There was an Off-Grid solar system on the roof, but it was providing only backup power. The owner had paid a hefty fee to connect to the local electric grid, so he faced none of the limitations of a battery replenished by the sun. In his living room, he had a huge TV and speakers; a stainless-steel Samsung refrigerator gleamed in the kitchen.

The Race to Solar-Power Africa – The New Yorker

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