Today’s newsletter is going to be a long one.
As well as this monthly newsletter, I write a profile on a hardware company on the continent doing some interesting work. Now typically, that profile is only accessible to patrons who support the newsletter.
When writing this month’s letter, I thought it would be great to show non-patrons what you’re missing. I hope you enjoy it and consider supporting the newsletter.
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Data analytics for PAYGo solar
Buvuma Island is on Lake Victoria, off the mainland of Uganda and about 77km away from Uganda’s capital of Kampala. For a snapshot into how remote it is, there is no suggestion of how to travel to Kampala from Buvuma on Google Maps. It is these surroundings that David Opio first called home. Growing up on the island that is unconnected to the central grid, he had always recognized the importance of electricity to empower life.
‘[Living unconnected from the grid] is not an problem that’s peculiar to me, there are a lot of people — about 80% in Uganda — who do not have access to electricity’
He’s completely right. At 20%, Uganda has one of the lowest electrification rates in Africa, as has been previously reported in the Christian Science Monitor. In 2018, the country had a nationwide blackout which the national electricity transmission company attributed to it’s sourcing of electrical power from its neighboring country — Kenya. On paper, it would be the perfect country to show the potential of off-grid power.
But when David graduated from Makerere University with a degree in economics, he was first drawn to another of Buvuma’s problems: the difficulty of small holder farmers to access markets and credit facilities. His team created a service that helped farmers track their loans from Savings and Credit Cooperative Societies (called SACCOs in Uganda), pay off their loan installments using mobile money, and helped these microfinance institutions build credit histories of the farmers.
Many of these loans turned out to be to provide off-grid solar power to the farmers who would purchase solar panels and batteries through the SACCOs.
‘In most cases when someone takes a loan, in a situation when you have not done proper due diligence, probably they will commit for the first couple of months and then start defaulting. This is really what gave birth to PAYGo enabled hardware’
PAYGo or pay-as-you-go solar power is a business model that allows a company essentially rent consumers a solar home system that comes with solar panels, a charge controller, battery and other components where consumers — typically using basic mobile phones in East Africa — make payments on a daily, weekly or monthly basis.
However, PAYGo has some limitations. As Stefan Grundmann argued earlier in May, the industry needs to do better at increasing transparency in pricing, investing in customer education, maximizing connections with customers, and establishing clear investor expectations.
The first step to all of these is data. The technology of the PAYGo industry has stalled at remotely controlling solar units, so that in case of customers defaulting on payments the units can be shut off. But David felt that the mode of customer management in the industry could be much better.
In 2013, his team ran a pilot with a solar company adding a hardware module to a solar panel so as to monitor current, voltage, temperature and sun intensity, and display these on a dashboard. The pilot was successful and the company signed up to continue using the service. This product, solarsentra, is the flagship product of gnuGrid Africa where David is CEO and co-founder.
‘We help solar companies provide the best after-sales service for solar equipment, [to have data] to pitch upselling of solar equipment, and also keep the customer in the know of how to optimize their energy use’
Since launching in 2016, their product has been vastly improved. It now incorporates APIs for weather forecasting, a feature to shut down the unit when it senses tampering, USSD services that their solar company clients can use to send information and collect payments from their users, and a system that shows the users’ credit history.
gnuGrid does not deal directly with consumers. Their clients — solar companies — gain access to a dashboard that they can use to monitor each of their deployed solar systems. While gnuGrid retains control of their software, their clients own the hardware by signing on to their service.
‘In five years, we would like to be in five other countries [other than Uganda], and serve 35% of the [off-grid] Ugandan market. We are projecting to break even with 20,300 installations and currently we have 14,808’
One of their concerns are that their fees might be too low. Their customers pay for the one-off sensor device ($25 per install), an annual subscription fee ($1053), and a monthly customer management fee ($0.58 per install). When servicing the bottom-of-the-pyramid, however, cost is a rigid constraint.
But, if growing up in Buvuma has taught David anything, it’s flexibility. He’s open to licensing the hardware and has been marketing the technology earnestly to solar companies — in the next 21 months, he says, we should have 15 companies as our clients.
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See you next month,