We discuss options to finance energy access in emerging markets, ranging from equity, debt, special purpose vehicles, results based financing and much more.

This episode was part of the Ross Energy Week event in 2021.

We discuss:

• The growing influence of telecoms companies in off-grid energy
• How energy access companies are partnering with telecoms companies to expand their customer reach
• Greenlight Planet's goals and how to market solar energy to off-grid customers

Show notes:

• (1:30) Introduction to Greenlight Planet and their focus on SDG 7; their vertically integrated business with manufacturing and distribution
• (4:00) Intro to the role of telecoms in the energy access sector: focus on hard to reach areas where telcos have a physical presence; leveraging the data that telco markets have on customer information
• (7:30) Greenlight Planet's partnerships with telcos - how they work
• (11:00) Use of telco data to provide customer financing and alternative payment solutions
• (13:50) The opportunity of energy access to help telcos diversify their revenue base and customer services
• (23:00) The goals of Greenlight Planet and plans for the coming years
• (27:00) The impact of COVID-19 on off-grid energy - increase of digital and mobile payments; more pre-purchase of energy
• (30:00) Naomi's background and her work in Greenlight Planet - how to market solar to customers
• (38:00) Partnerships as the way to accelerate the deployment of solar in off-grid energy

We discuss:

• The types of products ZOLA Electric has developed
• Challenges of product management for energy solutions 
• Differences in customer needs and demands across various geographies.

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Show notes: 

• (0:30) Introduction to ZOLA Electric 
• (3:00) Understanding the customer from off-grid to on-grid customer. Primary energy solutions: 
• ZOLA Flex - core product, DC infrastructure with solar and battery, with DC appliances
• ZOLA Infinity - can be a off-grid/on-grid solution, for a customer with some access to grid electricity, able to work with an AC system; modular energy system
• Flex Power - a new product to serve both AC and DC customers, that can work also within a distributed grid 
• (7:40) The product development and management process: collecting demographic data, user needs, comparing with existing market offering. Higher end markets with a greater focus on product differentiation to existing solutions. 
• (10:30) Expectations management: how to set / meet customers' expectations with regards to electricity availability; limitations with regards to product lifespan, availability of electricity; shifting customers from a power focused mindset to an energy focused (taking into account storage also). 
• (13:00) Challenges of working with older appliances with higher energy consumption. The 'benefits' of working with newer DC systems where you can also control the energy demand
• (14:40) Challenges of developing products that can meet the variability of grid power quality; variable wiring or electrical systems
• (16:00) How to manage the power challenges for product development - both operational and technical solutions
• (17:00) How to think about hardware, software, firmware developments
• (19:00) ZOLA'S geographical coverage, moving towards a distributor model and its ability to help ZOLA expand globally
• (20:50) Difference between customer demands by geography - e.g. greater need for air conditioning solutions for East Africa; differing penetration of smart phones
• (21:40) Customers benchmarking against a Tesla Powerwall solution
• (34:00) Challenges of working in West Africa, greater awareness of fraud, preference of financing solutions to ensure the product is working as expected; differing willingness to provide personal information to banks
• (36:00) East Africa: more trusting environment, greater focus on building education and awareness of solar products and solutions
• (37:00) Cameron's background and previous interest in global development; challenges of providing energy solutions that can meet customer needs 
• (42:00) The shifting focus towards peri-urban solutions, more people interested in global systems
• (44:30) Customer facing brand changing to "ZOLA" Electric - that resonates across Africa, not just in East Africa and Swahili
• (46:20) Future focus of ZOLA: greater focus on Infinity product, greater focus on microgrid systems and distributed grid solution - Infinite Grid product
• (50:00) Recommended books: 'Territories of Differences' by A. Escobar for greater awareness of cultural differences
• (52:20) Advice: make sure you have a good understanding of the end user
• (53:00) Predictions: Greater focus on microgrids, more focus on peri-urban customers

We discuss:

• Why an off-line maintenance solution is critical for remote minigrid operations
• The challenges of integrating renewables to microgrids
• Their efforts to make their user interface and graphics as international and self-explanatory as possible
• The importance of keeping mental health considerations in mind when working in remote communities, where there is often a higher incidence of trauma.

Show notes:

• (1:40) Introduction to 60Hertz: maintenance for remote energy systems; existing alternatives, e.g. primarily paper and pencil
• (3:50) Why remote maintenance with off-line capability is important and the lack of good existing solutions, how 60Hertz's solution works
• (7:45) Alaska's microgrids, in a remote location, the cost of electricity for some communities in Alaska
• (10:00) Challenges for integrating renewables with diesel systems
• (12:30) 60Hertz international projects; the similar problems faced by microgrid operators globally
• (15:00) Their target markets, including military microgrids, and how Tonya's background helps with their work
• (18:30) How Tonya and Piper started 60Hertz and how they came to the off-grid energy sector
• (22:30) The largest challenges faced by Tonya and Piper: technical challenges, HR & people management, and difficulty of raising money; operational & change management, balancing personal life, family and work
• (30:00) Their plans for coming years: increasing functionality, making their software accessible to users with low literacy abilities, focus on women maintenance providers, their product roadmap
• (34:00) The challenges of mental health in some of their work; adverse childhood experience, workplace trauma, military trauma, which are more likely in remote microgrids
• (37:00) Their fundraising background for 60Hertz
• (40:30) Industry focus on starting projects, but not enough attention paid to the ongoing maintenance requirements and long-term efficacy of operations to achieve the goals; the opportunity for local buy-in when designing maintenance
• (44:45) Where the name 60Hertz comes from
• (45:45) Favourite books for 2020: Traction, Insight, Braver, Biography of Dolly Parton, Extreme Ownership, Drive, Reality-based leadership
• (49:00) Advice: Timeline is different for off-grid energy; importance of relationships
• (50:30) Predictions: Growth, rural areas teaching urban areas about energy management

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We speak about their business model innovations to enable Sunny Money to grow sales in a sustainable and profitable way; how SolarAid and SunnyMoney work together to innovate entrepreneurship in rural, remote locations, and the importance of education and SunnyMoney’s partnership with schools, teachers and the Ministry of Eduction in Malawi. We also speak about how the solar industry has changed in the past decade and how the promise and potential for clean energy shifted Brave's aspirations to work as a medical doctor, to having now worked over 10 years in the solar industry.

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Show notes:

(1:00) Introduction to Sunny Money; SolarAid's founding by Jeremy Leggett, focusing on trade rather than aid

(3:20) Sunny Money's approach to innovative business model and the evolution of go-to-market strategy; initial focus on pico solar and solar lights; how the industry has changed in the past 10 years enabling businesses to focus on distribution

(5:00) Their focus on seeding solar businesses in local areas, receiving investment from local businessmen to expand their reach across Malawi, providing working capital for SunnyMoney who continues to manage the business; a financing innovation for local businesses

(6:00) SolarAid's partial subsidy to provide a cushion for the costs to reach a remote customer; how to get a substantial presence in a rural community; operational expenses which are partially covered by SolarAid

(12:00) Customer engagement model; an initial deposit paid by customer; sales representatives act as area agents to manage cash collections, after-sales services, payment management 

(14:00) Mobile money's role; supported business, however some areas where mobile money is not available. The continued need to manage debt; the difficulty of managing payments during seasons when customers focus on buying farming materials 

(16:00) Overview of the solar industry in Malawi over the past 10 years: growing customer awareness and interest in larger systems; government's role in supporting the sector, removing VAT and various taxes

(17:00) The government's potential to help with consumer education, making consumers aware of other affordable energy solutions; the potential for government infrastructure development

(19:00) Diesel genset, batteries as alternative energy sources; dry cell powered torches

(21:00) Brave's route into Sunny Money, initially wanting to work as a medical doctor, and seeing the potential to improve health with solar power

(24:00) Challenges of managing people, importing goods, financing assets; it's a new sector so there are many challenges

(25:00) SolarAid support in funding; Developing financing business co-operatives with Global Distributor's Collective 

(27:00) Surprised by the government's interest in combating energy poverty 

(29:00) How they decide to expand: looking at income levels, population density, support and existing infrastructure and organisations that can help them

(30:00) Their partnership with the Ministry of Education; using teachers' development centers as distribution points

(34:00) Working with SunnyMoney in other countries

(36:00) Advice: Be patient and keep innovating! 

(37:00) Inspiring figures: Jeremy Leggett and the person who introduced him to solar in the first place

(38:00) Recommended books: Blue Ocean Strategy

(39:00) Predictions: the off-grid solar sector will grow very quickly, with growing demand for investments

Contact us at podcast@distributingsolar.com

Visit us at www.distributingsolar.com

Follow us on Twitter ( https://twitter.com/distrib_solar ) and LinkedIn ( https://www.linkedin.com/company/distributing-solar/ )

Episode notes:

(1:15) Introduction to Yellow Solar Power, Maya's background in marketing and her start in solar lighting technologies, growing demand for solar technologies and shift towards SHSs; the lack of initial interest for off-grid companies to work in Malawi 

(4:30) Concerns by solar companies working in Malawi due its low GDP; the beginning of Yellow working to provide electricity to 4m households; their use of PAYG / mobile money technologies and platforms

(7:30) Their lean, bootstrapped approach to starting the company

(8:30) Yellow's agent network: trying to minimise transportation costs; investments in providing news, branding, information and training of their agents; a local-focused approach in high population density areas; agents as the central point of contact for their customers for a 24 month relationship

(13:30) Yellow's digital retail approach: a remote structure, all agents are online and on Whatsapp; applications are all digital

(15:30) Progress of Yellow: Started in 2018 and their faster than expected growth; the importance of fundraising and selling 20k units by September and expecting 50k units by December 2020

(18:30) Their agent scout approach, to bring on new agents

(20:00) Their decision to focus on Malawi; the impact of deforestation in Malawi on the lake and hydropower, reducing the output and reliability of hydro electricity

(23:00) The gender impact in energy

(27:00) How lighting affects women: the need for women giving birth to provide lighting, to look after the sick, to support girl's education, providing security

(29:30) Their approach for trying to encourage more women to join Yellow: the need to have a smart phone to be an employee; their Project Khumbo to encourage women to join; how women agents can relate well with customers and build a strong customer relationship 

(44:00) The impact of lack of education for girls in Malawi

(47:00) Maya's background, growing up in Kenya and her decision to move back to Malawi after university

(50:00) Where the name Yellow come from

(51:30) Recommended book/movie: 'The boy who harnessed the wind' - based in Malawi

(52:50) Advice: Understand your customer and know what they want and need; how solar can help to solve other social problems, e.g. urban migration

(56:00) Maya and her husband's love of travelling 

(58:00) Prediction: huge growth in off grid electricity in Sub-Saharan Africa, with huge opportunity

We speak about their work with the Rural Electrification Agency in Nigeria, their work with RBF (Results Based Financing) programs, 

how their platform is helping government and finance organisations manage their large scale decentralised energy programmes, and how the minigrid financing landscape is changing. Our conversation highlights the importance of operational data, and why aggregating and standardising minigrid data is necessary to accelerate the deployment of minigrid solutions in emerging markets.

Contact us at podcast@distributingsolar.com

Visit us at www.distributingsolar.com

Follow us on Twitter and LinkedIn

Show notes:

(2:00) Introduction to Odyssey Energy Solutions, their software platform focused on expanding access and financing into the minigrid sector. How the different stakeholders use their platform

(5:30) Their engagement with government organisations, e.g. REA; funds e.g. CBEA (CrossBoundary Energy Access)

Types of data they work with, e.g. CRMs, customer management systems, smart meters, inverters. The difficulty of investing in large numbers of minigrids due to the smaller size and vast amounts of data

(10:30) Their approach to standardising minigrid data; their work with AMDA

(17:00) The potential for Machine Learning in improving their forecasting and accuracy of their data models; meeting the need for asset owners and asset management

(22:30) How Odyssey interacts with financing and how it encourages and supports financing into minigrids

(26:00) Discussion on Results Based Financing, and how Odyssey works with RBF; strong signs of success in Nigeria

(32:00) Emergence of project finance in minigrids

(33:30) Odyssey's work on COVID19 with Cross Boundary; looking at consumer demand changes and electrification of health facilities

(36:30) Eitan's and Emily's background and how they came into the energy access sector

(39:00) The challenges of building Odyssey: trying to build a product for a future market

(43:00) Their work with NEP (Nigerian Electrification Program)

(44:00) Odyssey's financiers: FACTOR[e] and Shell Foundation

(49:00) Where the name Odyssey comes from

(49:30) Advice to new entrepreneurs in the energy sector

(51:00) Predictions for the next 5 years: more business innovation, greater scale in the off-grid sector, mixing between SHS and mini-grids, maturing of project finance available.

Podcast transcript:

Distributing Solar: Eitan and Emily, thank you so much for joining us on Distributing Solar. 

Eitan and Emily: Thank you for having us.

Distributing Solar: Odyssey Energy is a really impactful piece within the energy access sector and we're delighted to have you here because we've already had multiple guests speak about their experiences with Odyssey and how they've already been working with Odyssey Energy Solutions. 

According to the latest numbers on your website, you're already working in over 13 countries,  have facilitated over $350 million into microgrids and supporting over 500 product developers. It would be great if you could start by providing us with an introduction to Odyssey for our listeners who don't already know about Odyssey and the work that you do. 

Emily: Odyssey is a software platform with the mission to enable large-scale capital deployment into solar mini grids, and other types of clean, distributed energy technologies in emerging markets. Our fundamental goal is to get lots of money moving into new types of energy assets to expand access to power.

And the way that we do that is we build a data-driven investment and asset management platform that makes it easy to both evaluate investments in the sector and then manage a portfolio of investments once you've deployed capital.

Distributing Solar: How does a partnership typically work for you? Do you work directly with the mini grid developers or do you work also with financiers? 

Eitan: We have all types of different users of our software and part of the theory of Odyssey from the beginning has been that it would make the whole sector move more efficiently if data could be easily shared between stakeholders.

The idea being that if you're going to electrify hundreds of millions of people using distributed energy, that's a lot more data that needs to be evaluated, a lot more smaller projects creating a lot more information. And so, what we want out of Odyssey is to serve as a platform connecting different types of users.

The core software might be the same for everybody, but they're different types of users. So a mini grid developer has the ability to use our tools to evaluate a project that might be in their pipeline. So we have technical and financial feasibility tools that are available. Similarly, an investor might be able to receive a proposal and view the technical and financial analysis has been done on Odyssey. 

And then, on top of those types of interactions, we have  been focusing a lot on managing these large government and donor backed financing programs, essentially serving as a software platform where a government can collect proposals for publicly-backed financing of mini grids and solar home systems.

And so for them, they have the ability to collect standardized proposals and really run their programs much more efficiently, ultimately allowing them to deploy more capital into these programs and to have these programs run much more efficiently, whereas in the past there has been a lot of delays in program implementation. And so hopefully, you know what we're doing and what we're seeing in our early projects is that the results are happening faster.

Distributing Solar: And if I understand how the platform works it seems as though it's a software platform that allows product developers to enter in key information about a project that they're either planning to do or have started working on. Perhaps, information about the capacity of mini grid, et cetera, and then to match that with financiers who are interested in investing in mini grid projects. And then also then to open up that monitoring process as the grids are installed, implemented, managing information. So maybe if you could speak about the different types of data that you're pulling in, what are the analytical components that are really core to Odyssey's platform.  

Emily: Yeah, so just a clarification. We  do a little bit less of the matchmaking as you described and typically the way that our platform is deployed is that we will partner with a financier or a financial institution that's looking to deploy capital into the sector. And then we use that platform to standardize all of the data and interactions that that financial institution will have with all of the different stakeholders engaged in the process.

 Just to give you a couple of examples of what those institutions might look like, one of our biggest customers is the rural electrification agency of Nigeria that's running now about a half a billion dollar program to finance solar home systems and mini grids in Nigeria. And so what our platform does is manages the entire life cycle of the investments that the REA is making and so any private sector company that's looking to receive financing for their distributed energy assets from Rio will go through a process in our platform where they apply for financing, they submit on a rolling basis, proof that they have connected customers. And then finally they received their financial disbursements based on the results that they've achieved in terms of electrifying customers.  

Another example, that's the same technology, but kind of a different use case is a commercial investor, like Crossboundary Energy Access.

So, CBEA is a commercial project finance fund for mini grids. They're actually the first mini grid, asset funding in the market and they use our platform to manage their entire portfolio. And so when they need to ask critical questions about are the operators that we've invested in meeting their operational agreements, how is our portfolio performing in terms of system performance and economic performance, we collect all of the data from their systems that are in their portfolio and help them answer those questions. 

On the type of data that we collect again, it really spans the life cycle of a project. Upfront we’ll standardize the process of the techno-economic data that needs to go into planning a mini grid project. So that's information about where the project is located, what the capital expenditures of the project are expected to be, what the forecasted energy at the site will be. We run all of that through a standardized financial model and so it becomes easy to aggregate many projects up using  this sort of standardized data format into a portfolio that can then be more assessed by a financer who's looking to make an investment into many of these projects. 

Then once the project is up and operating, that's when we start collecting operational data and we plug into a number of different data sources, all which feed us very high volumes of granular data directly from the system.

We'll plug into the system inverter, we’ll plug into the smart meter, we'll plug into other operational systems that the developer might be using like a customer relationship management system. And we pull all that together into a standardized data model that then allows for analysis and analytics on the portfolio as a whole.

Distributing Solar: When you're speaking about the data sources that are being poured into the platform, how does that process typically work? Are you connecting with the mini grid operators, their software control systems? Do you have to install smart meters or is there a lot of customization that's required for companies to join your platform?

Eitan: Yes, so on the data monitoring portion of our software, we've built our big data engine to be able to take in data from lots of different sources. And so the most direct way would be to integrate with smart meters and smart inverters to collect data on energy generation, energy consumption and payments. But it can also look like pulling in data from other software platforms, like payment platforms, or CRMs. And then for areas where there aren’t smart meters available, we also have the option for uploading a custom data via something like a CSVs.

We might have an onsite data logger and export data from your site and you can upload it that way. The point being that what we want to make most possible for people is to gather and aggregate all the data surrounding these sites and make it easy to analyze and get their hard questions answered in one place.

Emily: Yeah, and I think, just to provide some more context, the main challenge that we're trying to solve with our platform is it's very hard to invest in a portfolio of mini grids. Unlike, let's say a typical energy project, like a big IPP project, right? Because what you're doing, if you're putting, let's say a hundred million dollars into mini grids versus a grid scale project, that hundred million dollars is going into lots of small projects. And each of those small projects generates about the same level of data, if not more than, you know, a single large energy project would. And so there's a whole new set of challenges that need to be solved in order to move lots of capital into this nascent market.

And so, from our  we're really trying to solve that, that data challenge. How do we make it possible for investors to get the questions answered and to get the information that they need to feel confident in their investments and deploy the type of capital that needs to go into the sector for it to really scale.

Distributing Solar: Perfect. That's great. And I'd love to hear more about the standardization.  As you were beginning to develop your product and scoping out the product features and the platforms, what were the challenges that you were facing with regards to standardization of either financial information or operational information 

Emily: As mentioned, we standardized data at different points in the life cycle of an investment. We have standardized diligence data and then we standardized data once a project is operating. On the diligence side, it’s less of a data and technology problem and more of a mindset, a new way of thinking about how you diligence these assets.

Traditionally, with energy investments you would have a very customized manual process. You'd probably hire a diligence consultant who would build a custom model for that project and really kind of go through a rigorous and project specific process. And what we're trying to do with Odyssey is say, you know, you can't afford to do that if you're trying to diligence a hundred projects at once, right?

And you need to diligence a hundred projects at once if you're trying to move a lot of capital into the sector quickly. And so what we've done is say, you know, what the unit economics of these projects are not fundamentally different. We think that we can basically standardize the process for assessing  the opportunity of a project and the way  to model out the unit economics of those projects.

And we can do that in a format that can kind of cover lots of different types of projects across different geographies and different technologies. And so it's still an evolving process and it takes a lot of innovative thinking to do something differently than, kind of, the way that investment has happened in adjacent sectors over many years. But we really think it's critical to be able to move money at scale.  We feel that standardization is going to be essential to enabling investment in the sector at scale.

Eitan:  I would also add that what I think is important to highlight is that what we're doing is standardizing the process of evaluating these sites and then ultimately monitoring them. But in the evaluation stage, we're not standardizing, we're not saying, you know, each mini grid is going to have this many customers with this many kilowatt hours.

We're actually allowing for very specific and granular assumptions to be made about each and every site. But because we're powered by software tools, we can standardize the way that they’re analyzed. And so ultimately, what you end up having is actually probably better analysis because frequently what happens now is that you'll have, you might have a consultant who's saying, trying to evaluate with the feasibility of a hundred sites for a country.

And what they do is they can't go build, you know, a hundred different financial models for each one of these sites. And so they're going to make some best estimates. And they're gonna say on average, you know, each site is going to look like this. But actually, if you have good software and what we're providing, then you can have a hundred different sets of assumptions that actually match each site because we've taken survey data, let's say from each and every site, but because analyzing them through software, we can in more efficient way, get to results that are standardized and easy to evaluate. But B they're more specific to each and every site. I think that's part of the benefits as well.

Distributing Solar: I'll be curious to understand how much of it is facilitating that analytical process and how much of it is leveraging historical data and historical information that has been collected in the past that helps you better produce a model that's able to predict future financial cash flows, or financial information from the site.

Is it purely a question of fine tuning and adding additional resolution to the models that you can create? Or is it also about, leveraging, as you say, the big data that you have access to and the historical information that's available.

Eitan: So, first I want to point out that it's important to point out that we don't own the data that developers or governments or financiers put into our software. And so we can't necessarily be using that data, in ways, uh, you know, we can't be like publishing benchmarks or anything without consent from our users.

So that's that's first. But I do think what you're hitting on is correct that what we're trying to do by putting all of the data from the lifecycle in one place is allow people to learn over time and get better in how we evaluate these sites. And so if you have, your feasibility study, if you have your financial projections in the same database as your actual results, then you can learn as you go and you can.

And then you can fine tune your assumptions because, ultimately, we don't really know the answers to what will energy growth look like in year three or four or five or 10 when a mini grid arrives in a community. People have guesses, but we don't really have hard answers powered by data. And so that's what we're trying to provide to people, to ultimately, make better decisions and deploy capital more efficiently.

Emily: one of the reasons why we originally built the Odyssey platform was my co founder and I were mini grid project developers ourselves, and we were spending a lot of time talking to investors, trying to get them to invest in a large portfolio of mini grids in India and Tanzania.

And the response that we kept getting from investors was, well, there isn't enough data in the market for me to benchmark anything that you're telling me. So we we'd build these models, we'd say, okay, we expect our average revenue per user to be X or, you know, the average cost per connection to be Y and the investors would tell us, you know, there, there's just not enough data out there for us to evaluate whether or not these are reasonable assumptions.

So fundamentally, what we thought is, hey, can we standardize the way that these metrics are collected and reported so that we can get that information into the sector and increase investor confidence from the data. So one of our partners on the Odyssey platform is the African Mini Grid Developers Association and what's really exciting about the way that we're working with them is we intake data from all of their members who are reporting on all of those metrics that investors care about. You know, key cost and sort of financial parameters and scale parameters and we're standardizing on that in the platform and then enabling AMDA through data agreements with their members to publish that into the market.

And, actually, their benchmarking report just came out which is super exciting and it's the first time the market has had really comprehensive data on various parameters of nearly every mini grid that's operating in Africa. And that type of information that comes from a centralized place in a standardized is going to be absolutely critical for moving the market forward because it gives investors something to benchmark when they're receiving investment materials from new projects.

Distributing Solar: That's great. I think that's a really helpful context to think about. And, building on from that and some of your comments about the challenge of innovation, what do you see as the next steps and the next goal for Odyssey? What are you building towards and what are your aspirations for the next, say, two to five years. And, similarly, what are the challenges that you're facing at the moment?

Emily: Yeah, lots of things in our plans.  So one thing that just to kind of tie what we were just talking about,  to tie that in, I really believe that there's a ton of opportunity for machine learning. Now that we've kind of completed the loop in terms of the data from project origination through operations.

So we're really excited about the possibilities of having enough data in the platform that we can start to train our system to understand, okay, here's what we forecasted about this site. And then here's how the site is operating. Can we get better at improving our models for forecasting and get more accurate about our predictions for a site.

And of course, that's going to be the most important for facilitating investment into the sector if we can say, hey, our models are getting really good at saying, this is how people in this we'll use power. This is the size system that we know we need. And so these are the financial returns that we expect from this project.

So as we build up more data in the platform, there's a ton of opportunity for machine learning and that'll be a big thing that we focus on. And then the other thing that we're really focusing on is meeting all of the needs of asset owners in the market. And we say asset owners because it could be investors that are owning a portfolio of microgrids or it could be actual operators of microgrids that have investors, have special purpose vehicles (SPV) for their investments, and need to report to investors and need to do really good data analytics across lots of different systems.

So we see in more developed markets the need for asset management for investors across the board. I mean, it's a very common technology need. There's a number of software solutions. And our goal is to serve that market, for the mini grid in industry with the energy sector in Sub-saharan Africa.

We've got a number of anchor customers on the platform that are helping us understand what is unique to the mini grid sector and what is required for full investment asset management. And there's lots of new features and functionalities that we'll be building over the next few years to continue to meet those needs, especially as more and more of these types of users join our platform and start to scale their investments.

Distributing Solar: And one of the things that you just mentioned that I thought it was useful in trying to hel, mini grid developers actually understand how people will use power is, we hear a lot about how a lot of mini grid developers will initially start out by sizing their mini grids to say, you know, 40 kiloWatt hours, because they've conducted a survey and people think they will be watching the TV for five hours a day and running the fan, et cetera. But when it comes to actually using it on a longer term basis, there is a lot of interest at the beginning typically and people all willing to pay for it. But eventually, some of the cost constraints kick in, and perhaps it's also an issue about the novelty wearing off. Have you seen that reflected in the data that you've been collecting or have you had to program that into your models at all to reflect some of the behavioral elements behind the mini grid sizing and the financial opportunity?

Eitan: It's largely a mix, right? I mean we are seeing a lot of different results from different countries and different types of developers. I mean, I think that it is rather idiosyncratic, right? I mean, you have, some mini grids are more based in marketplaces and some are based in communities. Some you have developers who are doing demands stimulation interventions. And so therefore, hopefully they're seeing stronger results. And so, I think we do see a wide gamut, in that regard. We're not going to reflect that in our models per se, only because we're going to leave that up to the developer to put in their assumptions about the growth over the long term.

And then, you know, ultimately when we monitor sites we can see how the reality stacks up against projections. I mean, I think we are doing some interesting work. We're working with the CrossBoundary Innovation Lab which is out there to test different strategies in the sector and they're using Odyssey to test these different interventions or different types of appliances, or are least, in communities where there are many grids. And ultimately they're using Odyssey to track how these interventions affect demand. And so, we're hoping to be part of some of these solutions that help and is trying to really answer some of these hard questions.

Emily: Yeah, I mean, if I had a dream, it would be that, one day, our models are so good that they can say, okay, if X, Y, and Z is true in a community, your demand will be this many kilowatt hours per day and this is a size system you need. No one's there yet in the second. But our job as a data platform is to enable all the efforts to crunch the information that will eventually get us there. So, as Eitan mentioned, this work with the innovation lab is really exciting because we're processing something like a billion data points for them on consumption and payment data so that they can draw conclusions about what happens when you provide a loan for an appliance to a household. Or, some of the other things are prototyping. And the goal is that then they can draw conclusions about which business models make the most sense. And which variables play the biggest role in improving the unit economics of a mini grid.

Eitan: And I think also the other thing I'd say is that Emily mentioned machine learning but we're also just learning ourselves in that through our software we've run a few large scale feasibility studies  for government entities in different countries in Africa, and that involves taking ground survey data. So asking people, what appliances do you have? How much would you be willing to spend? And then turning that into load projections andProjected energy consumption. And so, I think that we're getting better at translating the survey answers into actual projections.

Certainly machine learning down the line, but also just, we're getting better at that and I think the whole sector is as well.

Distributing Solar: Great So I think that's provided us with a great overview of what Odyssey does and what your product focus is. For you as a company, what is your business model? Are you looking to be a software provider for this platform, or, do you also have goals on the financing side as well? We'd love to hear more about that.

Emily: Our goal is to be the underlying software and technology for financing institutions. So we don't have plans to be one ourselves but rather to support any fund or facility that's putting money to work in the distributed energy sector. 

Eitan: Originally we had the theory that we could have a financing marketplace for distributed energy projects. And so developers would design a portfolio of projects, standardize it, make it easy to understand and then publish it and raise capital through Odyssey. 

I think what we realized pretty quickly thereafter is that the market wasn't quite there yet in terms of having enough volume of investors to make that a worthwhile approach. Instead what we uncovered from spending some time in the sector is that the market is being driven and the capital, the larger portion of the capital being invested is still driven by these government and donor programs.

And so, we shifted a bit instead of an open marketplace, kind of a, you know, like Airbnb type thing for mini grids, instead it's more of a we're providing a platform for large financial institutions or governments who are financing these projects to run their funds and their facilities through the portal. 

So that's on the financing side and then there's a whole other aspect of the asset management and the asset monitoring once sites are operating, which is sometimes connected but at different revenue streams in a different business model approach.

Emily: Yeah, and the asset management piece was really built around the understanding or the realization that every financier's needs are going to be different in terms of the questions that they need to answer for their portfolio and the types of data that they need to collect across projects and across different operators.

And so what we really focus on is having a way to standardize the data model that's underlying all of the analytics so that we can essentially serve the data up and say, okay, you've got questions that you want answered, we're going to present very complex and high volume data to you in a way that you can actually work with it and get your questions answered.

So those questions look very different for a user of our platform, like the Rural Electrification Agency or the World Bank who want to know, let's say, how many connections have been electrified or what's the greenhouse gas impact of our financing program versus a commercial investor that might need to know something more like what's the average revenue per user of my investments in this Northern region of Tanzania or compare that to Nigeria or whatever the kind of investment analysis they need to do are.

And so we're starting to recognize that, while the questions are always different, the kind of underlying technology and data needs are the same. And we can meet a lot of those needs with our asset management platform.

Distributing Solar: And how have you seen the market evolve in the past few years? I guess it's an incredibly fast moving market. It seems as though every year there's records being hit with regards to investments or commitments from the World Bank and so on.  Has that impacted your business and what has been your observations in working in the sector over the last few years?

Emily: So one of the biggest market developments that's impacted our business and the sector as a whole is the emergence of results-based financing mechanisms  to provide subsidies to mini grids and solar home systems. You know, when I first started working in the sector, everyone was afraid to talk about the fact that many of these projects require a subsidy to be economically viable, even though in, developed countries when we embarked on our, you know, let's say our rural electrification plans here in the US, it was all heavily subsidized. 

That framework has now shifted in the market and there's a growing acceptance and understanding that subsidies are an inherent part of rural electrification and if you get them right and if you make them very systematic, it becomes much easier to get the other types of capital into the market that are required for scale. And so we've, over the past few years, have been working on an initiative that's now being led by the Sustainable Energy For All called the Universal Energy Facility. 

And the the principles behind it are, if you have a facility that's very streamlined, and has a very clear systematic per-connection subsidy for a mini grid project or for a solar home system project, that's something that commercial investors can then rely on and they can come in alongside that systematic subsidy and provide the commercial capital necessary to get the project off the ground.

And this was a pretty new and radical concept a few years ago. And now it's one that's being widely accepted across the market and we're seeing more and more governments and development, finance institutions, institutions, and donors realize the benefits of a more streamlined RBF. And what was exciting about that for us is our software really helps to speed up the process of facilitating this type of funding.

Cause you can imagine that if you're trying to issue funds on a per-connection basis, that is a lot of data to process, right? You've got like tens of hundreds of thousands of kids, actions being submitted and you've got information about each of those connections that you need to review. You need to be certain that it's a live connection before you disperse funding based on it.

And we really built a lot of technology in our platform to make that process very straight forward, both for the company that's looking for the financing and then also the facility that's running the results based financing facility. And with the introduction of smart meters into the market, we're able to actually reduce the burden of verifying a live connection.

So we can actually plug into a smart meter, run an algorithm on the data that's coming from that smart meter to determine whether or not it's a valid live connection and basically put a stamp of approval on a connection in order for a financier to feel comfortable paying out that connection on a results based basis.

Distributing Solar: That's great. So you're also providing the investors and I guess the donors with evidence of the connection actually existing and just taking the mini grid developers word for it, or having to go on the ground and validate that data. What are your general thoughts and perspectives on the importance of results-based financing? It certainly seems to have a lot of, Strong supporters I would say within the energy space would be really curious to hear what your perspectives on it are.

Emily: There's two things that I really like about results-based financing. One is that it directly ties capital to results. And so I think it's one of the most efficient ways to put concessionary finance to work. So just to give you an example, we're running a large results based financing program right now for mini grids and solar home systems in Nigeria.

And the World Bank, and it's part of the Nigeria Rural Electrification Agency, they can log into our platform and see directly how many connections their money has gone to fund. And so you can get some really great statistics on whether or not the capital that you've allocated for a financing program is going to the intended results. And they can see it, you know, how many of the connections are households versus businesses? How many households are the head of the house was a woman. I mean, all types of metrics that they care about, they can actually directly tie to their financing, which is something that's pretty hard to do for other types of financing programs.

And then the other thing is, I mentioned this earlier, but the other reason why I think results based financing makes so much sense is that it's very systematic. It's something that a company and then it's commercial investors can rely on. They can say, okay, if you go execute, you will get this subsidy in the same way that, you know, other countries had things like feed in tariffs.

Whereas it was a form of subsidy that could be built into the financial model so that commercial investors know what their returns will be, taking into account the subsidy, which of course improves the unit economics of the project and makes it easier to invest in these projects.

Eitan: Yeah, I would just add that I think to a certain extent it's an elegantly designed thing because you're allowing the private sector to sort of do its thing to a certain degree without the government deciding from a top down perspective what are the best sites. You're actually allowing the people who will be owning the assets and managing the assets, if you're building your RBF and sort of this open call model, like in Nigeria, they're the ones who are finding sites, and submitting them  for RBF. And like Emily said, they're only getting grants or concessionary finance once they build the sites.

And I think, you know, if you look at the actual results so far in Nigeria, it's very encouraging that these RBF programs are seeing results way faster  than what we've seen in the sector before. And I think that's in large part due to this RBF structure and the fact that, as you were mentioning before, through Odyssey it does allow for running these programs at a much bigger scale. 

Distributing Solar: How do you see the market, especially for mini grids evolving, and it would be great to hear your thoughts on this. Certainly, I think the need for subsidies is really paramount, as you've already mentioned Emily, and we've heard that from a number of guests as well, because recognizing that subsidies are required to reach in particular last mile customers or particularly remote communities or particularly low income communities as well.

How do you see the market evolving? Do you think it will continue to be driven by a mixture of government funding, multilateral institutional funding, for instance, or impact investors and philanthropy? Have you seen kind of shifts with regards to the market dynamics and how do you think it will evolve in the next five to 10 years?

Eitan:I think, and again, going back to Nigeria, because it is sort of the most ambitious program in the World Bank's NEP program, you know, part of their theory was we're going to have these grants, these concessionary finance, and that will bring in private capital because it will lower the risk.

And that was the theory. I think it was a real question at the beginning whether or not that would actually. And I think that what's exciting is that we're actually seeing that activity on our platform now where the local commercial banks are coming in and they're saying, all right, these projects are getting built, are getting financed. The grants are happening. This is sort of working as designed. We're ready to start looking at this in a serious way, right. We're ready to allocate resources to understand the sector, which is a big step for these banks which are rather risk averse. 

And so I do think that this model is proving to be effective and that the combination of concessionary finance from multilateral Institute and local commercial capital can be the path forward for the sector.  

Emily: I think the other trends that we are starting to see, and we'll see more of over the coming years, is availability of project finance. So, in the early days of the mini grid sector, the only available finance for mini grid developers was corporate level, basically mostly corporate level equity, right?

Like there were impact investment firms that were willing to fund the company, they would build projects on their balance sheet. And that's obviously a pretty inefficient way to do project development because then you've got the money tied up in those projects for a long period of time. And I think with CrossBoundary leading the way and the other investors following suit, we'll see more project finance available, either in the form of project equity or project debt, which will enable much faster development and, therefore, significant scale in project development.

 Distributing Solar: Great, so it seems as though you are seeing also the effectiveness of commercial capital being crowded into either grant funding or philanthropic funding as well. So that's great to hear. 

Perfect. I'd like to hear and discuss the impact of COVID-19. It seems as though suddenly, from publications and news reports and articles that you've produced,  Odyssey has been doing quite a lot of work within the COVID-19 and coronavirus response, and particularly in partnerships with Rockefeller Foundation and Shell Foundation in recent months.

 We'd love to hear more about the work that Odyssey has been doing in the sector and what your focus has been so far.

Emily: Sure we have been doing a lot of different things related to COVID-19 and thinking about its impact on the African countries where we work. So, one thing we've been doing is we've partnered with the CrossBoundary innovation lab to analyze the impact of COVID-19 on consumer behavior of mini grid customers.

So we've been publishing a monthly update with CrossBoundary pulling together all of the data from operating projects on the ground to say, are we seeing things like a drop in consumption or a drop in revenues from mini grids due to COVID-19? And it's actually been really interesting because we'd expected a much more dramatic impact on mini grid operations.

And we've seen it's sort of been a bit of a mix but we're continuing to watch really closely and engage with what the data is telling us about how COVID is impacting mini grid power consumption and payments. The other big piece of work that we've embarked on is supporting efforts to electrify health facilities. So I think this is something that has been a topic for a long time, but has certainly been highlighted with the COVID crisis is that there are many many rural hospitals and clinics and even peri-urban hospitals and clinics that do not have access to reliable power.

And it is impossible to provide high quality healthcare if you can't do things like refrigerate medicines or vaccines or run ventilators. And so, we partnered with the Rockefeller Foundation and the Shell Foundation to provide our software technologies in support of donor programs that are being launched to accelerate electrification of health facilities. And so those resources look like using our data platform to identify and prioritize health facilities that need distributed energy projects deployed onsite. And then to manage the kind of rollout of large scale health electrification programs.  

And one of the key reasons why we structured our work with the Rockefeller and Shell Foundations in the way that we did is that, you know, in moments of crisis, it's easy to kind of say, okay, we've just got to deploy lots of energy projects. We need to get them out there quickly and let's just focus on kind of the emergency response. But these are long term assets that are going to be operating for a decade and so, you know, a lot of thought also needs to be put into how do we make sure that these are sustainable projects that even when the CVOID crisis is over, these hospitals have access to reliable power and have the right agreements in place for The project operators to continue to maintain and operate the system.

And our software enables tracking projects over the lifetime of a project and even plugging into that system and making sure that it's continually providing reliable power over the lifetime of the of the project. And so we've partnered with a number of governments and donor institutions and development finance institutions to deploy this technology and give them the resources they need to think about the long term sustainability of these health electrification programs that they're initiating.

Distributing Solar: Great, thank you. And I'd love to discuss more about both of your personal backgrounds and your route to working both in the off grid space and Emily for you as well, and, starting Odyssey as a company.    

Eitan: Yeah, so my background is in financing renewable energy. So early in my career, I was working in venture capital, private equity, focused on renewable energy and clean tech. And then, after doing a year working at mobile payments software focused on emerging markets, I did, graduate studies, an MBA and a master's of environmental studies and that's where I really spend time focusing on renewable energy finance. 

And from there went to Lumos Global, a solar home system provider with operations in Nigeria and Ivory Coast. And so that was my first experience in the off grid space where I, you know, directed business development and I was in charge of our asset financing strategy and how we wanted to go about, you know, much like we were talking before, is turning this from a corporate equity financing to an asset back project finance type financing. So I worked there for a few years before very happily joining Odyssey a couple of years ago.

Distributing Solar: Great, and how about you Emily? How did you come to start Odyssey? And what was the path for you like?

Emily: Yeah. So I got into the energy access sector about a decade ago. I had a Fulbright fellowship to study off grid solar in India. What's pretty amazing is like, looking back in, let's say around 2010, the question was how our company is going to convince rural communities that, you know, small solar lanterns made sense.

And if you go into any rural community in India today, it's like a no brainer. You see solar lights everywhere.  I've seen the sector change so dramatically over the past decade.  But I definitely never expected to start a company in the space.

I kind of call myself a reluctant entrepreneur. I was never someone that thought I would be an entrepreneur. But Odyssey really came out of my experience. My cofounder and I built a mini grid development business that was a subsidiary of a large renewable energy company based in the US.

And so we were developing projects in India and Tanzania and we saw the market emerging, kind of, went through a lot of the challenges of trying to develop and finance mini grid projects ourselves, and felt like there were some things that we could build for the sector that would streamline the process quite a bit.

And so, in some ways, we sort of fell into building Odyssey cause we felt like the sector needed it and then, obviously, as the market has kind of changed and matured over the past three and a half years, our product and our business has as well.

Distributing Solar: And I'd love to hear a bit more about that process of building the company. What were the most difficult things that you had to deal with?  What were the biggest challenges for you as you built the company? And were there any significant changes in direction or strategy that you had to deploy?

Emily: Yeah. One of the biggest challenges in the early days of envisioning Odyssey was that we were building a solution for the direction that we expected the market to go, right? So the mini grid market is still nascent. And it was quite nascent, three and a half, four years ago when we were starting to kind of envision Odyssey, but we knew that it was going to scale and we wanted it to be part of the solution that helped at scale.

So unlike, let's say an eCommerce company, right. Where it's like, okay, I know that there's a market of consumers out there and I just need to build the right product to sell to them, we were building the product that would allow those customers to be there. And so our platform is intended to catalyze the market rather than serve an existing market.

And that's always been the challenge of Odyssey is, kind of, understanding where the market is going. Making sure that we're kind of building at the pace of the market and building what the market needs today but with an eye towards, where we want the market, where we expect the market to be in five to 10 years.

Distributing Solar: And as a result, have you had to change strategy? Has the pace of the market hasn't grown quite as quickly as you expected? What were the implications for how you had to go about running and building the business?

Emily: Yeah, I think Eitan mentioned our original plan was to develop a pipeline of projects, standardize those, aggregate them into a portfolio and put them into a marketplace where investors could, diligence them and invest. And the market clearly wasn't ready for that framework yet.

And, part of that was because the, so much of the capital that was being deployed into the market and is in today is continually being deployed into the market is concessionary financing from governments and donors and DFIs.  And so I wouldn't say it was a pivot, but we certainly launched a new version of our product that was aimed at those types of financiers. And that was really essential for us because it enabled us to get lots of capital on our platform, lots of projects on our platform and then start to see projects getting financed and moved. 

And in terms of scale, I wouldn't say that the market is scaling slower than we expected. I think it's scaling pretty much at the pace that we expected and we've been kind of following that scale. So our newest, our newest products are really oriented around companies, either commercial investors or asset owners, who are starting to see the type of scale required to have asset manage technologies.

And we've launched that product with the leaders in the space. And then we're sort of expecting that we'll start to see more companies that look like those leaders as the market as a whole starts to scale

And so we are very much building what we think the market will need over the next five to 10 years. And it's fun because it allows us to build according to our vision and our dream of where we want the sector to be. But it's also often a challenge too, as one of my mentors said to me that, you know, being early in a market often feels a lot like being wrong.

And I think that that's something that we think about a lot, like, how confident are we that we're building what the market needs? How confident are we that the market is going to go in the direction that we expect, that we will start seeing solar mini grids be the primary way that unelectrified communities are electrified over the coming years.

You have to have a lot of optimism to work in the sector and in a lot of faith that the sector is going to go in the way that we want it to go.

Eitan: I think from that, the flip side is there’s a level of excitement there, right? Because we, as Emily was saying, A) we have the ability to kind of co-develop our products along with the market. And 2), you know, it kind of forces us to be flexible and listen to the market a lot because we have our ideas and we consider ourselves a leader in the sector and we have opinions about where things should go, but we also have to do a lot of listening.

And so I think that lets us be part of the conversations we're reflecting in our software where we're sort of the go-between between different stakeholders.

Emily: Yeah, I think that like early days of the Nigeria Electrification Project is a good case study of this because it's not like they necessarily knew at the outset of this project that they needed software to manage NEP. Like now it seems very obvious that if you're managing a project of that scale, you would need technologies to help you streamline it.

But the origins of us getting involved in NEP is that I was presented being at a small workshop. And this was back in the days when we still had this kind of more marketplace concept to Odyssey. And one of the World Bank folks who was working on NEP saw what we'd built and said, Oh my gosh, this is exactly what we need for Nigeria, we're about to launch the largest rural electrification program in history. There's going to be so many dimensions to it. So much data. We need something to manage that all and nothing really existed. Right? 

And so we were able to kind of repurpose and adapt and customize and build our platform in lockstep with NEP as it was launching so that, you know, by the time that it got off the ground, we had the right solution in place to support that project. And then obviously our goal is that we're going to see lots more of these really large scale financing projects come online in the next few years. 

But it's definitely been a very iterative process. It wasn't totally clear exactly what the market was going to need. And we started building and we kept building and we kept building until I feel like we're in a really good spot and have built what the market needs where it is today.

Distributing Solar: Yeah, absolutely. And so my day job is a VC and I work in the energy space as well. And I think that is exactly one of the challenges that we think about. Are we right to make that investment and that bet on the company, or are we either just too early or totally wrong and that's not what the customer wants as well.

And I guess related to that, if I understand correctly, I think Odyssey is at least partially VC backed. We'd love to hear about your fundraising process. Have you had it be a challenge to bring investors on for other people to see the vision that you have and to get other people and investors excited about your company.

Emily: We have incredible funding partners. We're very lucky for that. Odyssey was, sort of, co- built, with Factor[E] Ventures, which is a venture firm that's based here in Colorado, and is actually the reason why Odyssey is also in Colorado. I was an entrepreneur in residence with Factor[E] for about four to five months as we were coming up with the concept of Odyssey and thinking really hard about, you know, what we thought the sector needed to scale.

And then once we'd gotten it to a place where we'd workshopped enough with key financiers in the sector, key stakeholders in the sector, we spun it out into its own business and then took it from there. So Factor[E] is both a kind of co-founder and our seed investor. 

And then since then our partner has been the Shell Foundation who supports for profit or commercial companies in hard markets like the energy access market. And they've just been an incredible partner to us because they very much see the market in the same way that we do, understand those challenges, but also understand, kind of, the enormous opportunities there are to build technologies and products to help it scale.

Distributing Solar: That's great. And we've spoken a bit about Nigeria already, but I'm curious to hear which projects have you most enjoyed working on, which countries are you the most excited about for the growth of either the mini grid or off grid energy solutions in the future? 

Emily: We obviously love working in Nigeria. We have a great partnership with the Nigeria Rural Electrification Agency. They are doing incredible, incredible things. And they're just sort of like a very smart, motivated group of people that have had a vision that we've gotten to help carry forward from the very early days to operations which is where we are now. That said, if you'd asked me a year ago, I probably would have been hard pressed to name other countries that I thought would follow suit. And I would say even in the past year, we've seen so many other countries start to plan really ambitious programs for solar mini grids and solar home systems.

I mean, we're seeing activity in many West African countries, in Southern African countries like Zambia. The DRC is starting to see quite a lot of mini grid development and mini grid planning. And so it really does sort of feel like at the time that Nigeria led the way but a lot of other countries are starting to plan for large-scale programs that will meet the rural electrification needs through mini grids and distributed energy.

Eitan: Yeah, I would say that that's ultimately the one of the most exciting things about the scale of the Nigeria program is it is really proving to all these other countries that this is a viable model. And I think that off-grid energy is now consistently part of these national electrification plans, which I think even when, you know, five years ago when I started the sector, that was a debate, right?

Whether or not you could even think about mini grids as a viable national strategy. And now that's not the case, right? It's very clear that it is the most efficient way to bring electricity to a large percent of the population. That's now, I think, is taken as a given then. And now with the NEP in Nigeria being so successful, you can now say that there is the ability to do it at scale.

And that hopefully we're moving to a place, and we're seeing that, where it's not just, you know, a dozen small programs where, you know, this donor is financing for mini grids here and some there, there isn't really a coherent plan. I think seeing it done at scale is what we're hoping to see or already starting to see, but I think we'll really see in the next, three to five years.

 Distributing Solar: Great. And how have you thought about your team? You're headquartered in Colorado in the U S, but obviously service countries all around the world, primarily in Sub-Saharan Africa, but also other areas as well. How have you thought about your team and how have you structured your team to support your customers in the best way possible? 

Emily: We've been really conscious about building a quite diverse team. I think it's, you know, it's certainly a challenge starting a company based in Colorado, that's focused on Sub-Saharan Africa and, over the years, as we built out Odyssey, we've really focused on that, how we can bring different skill sets and then also different experiences to our team.

 So to give you an example, our Vice President of engineering, so our teammate who built the whole architecture of our platform, is based here in Boulder with us but grew up in Tanzania and spent many years of his childhood without access to electricity. And so it's been a really exciting process for us to allow him to kind of go crazy and have great ideas about what product we want to build, but do so in a way that's anchored on the fundamental problem that we're trying to solve.

Like, he understands it better than anybody why we're doing this work and why it is so important that our technology plays a role  in scaling mini grids. And since then we've actually been working on building our team in Africa because, well, so we've got data scientists that are based in Rwanda. We have one of our key business development managers based in Nigeria. And it's been a really fun process learning to work as a team across many different time zones, across different cultures and geographies and skill sets. And, you know, it's something that we're, always evolving on and improving on.

Distributing Solar: Great. One question I always really like to ask is where did your company's name come from? And why Odyssey?

Emily: So, Factor[E] Ventures, as I mentioned, is our seed investor and it was actually Morgan DeFoort idea. He's the head of Factor[E]. And it came from our relationship with Homer which is a microgrid optimization software. We plug into them where we kind of sit on top of them as a web based version of Homer.

And so we thought it'd be a fun plan to have Odyssey and Homer.

Distributing Solar: Great. And what advice would you give to someone who is looking to join the energy as a sector

Eitan: Yeah, I think on advice on people looking to get into this sector, certainly anybody's trying to start a company and the sector I think is, the same advice is true for almost any business, which is knowing your end user. I think that, probably more so in our sector than many others, there's a lot of assumptions about the end user and people from far away places who are assuming that, you know, electricity might do this or might do that in a rural village. I think that having a humility about your assumptions is really important in our sector. 

Emily: You know, folks are often intimidated. I talked to a lot of younger folks that are interested in getting into the energy access sector, but it's intimidating because it's, you know, if you live in the US it's a far away market, or, you know, it's a market that's constantly changing and it's hard to map.

And I think Eitan and I both wrote our graduate school essays on wanting to go work in a startup in the energy access space after graduate school. And that's obviously what we both did. And you know, if I have any advice, it's just go do it. I mean, I've learned so so much working in the sector. I don't think I could have learned as much in any other job that I could have done in my career. And, it just comes from, you know, on the ground experience and just trying something that's doing lots of new things.

Eitan: Yeah. And I, I think also the market is so big. And, I think there is a sense of there are a couple of business models that have been tried and then had been copied a bunch of times, but  I still feel as though we're very early in the business model innovation in the energy access space

Distributing Solar: Great. So, to close up the conversation, I always like to ask our guests, what are your predictions for the off grid solar sector for the next five years?

Eitan: I think over the next five years, we're gonna see a lot more scale. We're gonna see a lot more capital deployed. I think it will still be led, even in five years time, I think it will still will be led by some of these multilateral and government programs, although with more and more commercial capital coming in. And I think there will be more business model innovation in the sense that, we're already starting to see, desegregation between, the developer of the mini grid doesn't have to be the same company that's doing the O&M and that might not be the same as doing customer management. 

And so I think, perhaps the disintegration of that whole business, where you could have companies who specialize in certain aspects of distributed energy could be interesting. And then I think also related to that, there's probably, a lot of, blending the lines between solar home systems, commercial/industrial projects and mini grids, which are frequently treated as like three different buckets. And I think that there probably will be more and more companies who are blurring those lines. 

Distributing Solar: And I guess to that last point, which is something I've heard from a number of companies as well and I find really interesting, do you think it will be that the companies working on these projects will start to provide different product offerings because they need to diversify their customer base or products that they're offering?

Or do you think it comes more from the side of, you're building various types of infrastructure  and at some point you want some kind of interconnection and integration between those different units?

Eitan: I think it's, actually more that getting a sense of what your core skill set is and that it may be that if it is in selling electricity and managing customers relationship then it may not make a big difference in the infrastructure behind it. Or on the flip side, if your, specialty really is

raising capital and developing projects, then those skill sets might apply in any event, whether that's a C&I project or a mini grid. And so, I think it's a bit tied towards the disintegration I was mentioning before where, you know, if you're taking only a certain phase of the project development life cycle, then it may not matter what the underlying asset is as much.

Distributing Solar: That makes sense. So you're catering more towards your specific strengths or new skill sets and the technology doesn't matter too much as a result. 

Emily: Yeah. I mean, I think to build on that, and I mentioned this earlier, I think we'll start to see more types of project finance vehicles that look like other sectors, and the type of infrastructure financing that has happened in either the other energy sectors or either, more broadly, just other infrastructure sectors.

So we'll see the market maturing in the type of capital that project developers can access. And then I think we'll see many grids and lots more countries. As we mentioned earlier, we're just starting to see lots and lots of new countries in the planning process for how to scale mini grids and I'm really excited to see a lot of those programs come to fruition in the next five years.

Distributing Solar: Great. Fantastic. Well, thank you, Emily. And thank you, Eitan, for joining us on Distributing Solar. It's been a pleasure to have you here and thanks for your time.

Emily and Eitan: Yeah, absolutely. Thanks so much for having us.

This is the shorter version of our conversation; full conversation also available.

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VIDA website: https://www.villagedata.io/

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VIDA website: https://www.villagedata.io/

Show notes: 

(1:55) Tobias' background and how he entered the energy sector

(4:00) The reason they produced a report on digitalisation, and the limited progress and adoption thus far within the energy sector in frontier markets

(7:00) The main reasons the industry is not on track to meet SDG7 by 2030 - why scale has not reached the energy sector yet

(9:20) Introduction to digital payments, which is the most developed within the sector; introduction to scratch cards through to blockchain technologies. A lot of solutions deployed are not fully tech-enabled yet; the technology adoption story that is emerging

(15:30) Village Data Analytics and their approach to digitalisation and what the need is for additional data to accelerate the pace of deployment; decisions currently made in data lean environments; VIDA's focus on off-grid areas

(19:00) Intro to VIDA / Village Data Analytics; helping to make decisions on where to build minigrids, extend the grid, etc. 

(21:20) Focus on decision making rather than just information provision

(22:30) VIDA's approach to obtaining new sources of data (e.g. from satellite imagery) and using Machine Learning methods to impute data that does not currently exist; specialists developing models with deep industry knowledge

(24:45) Examples of customers: governments (e.g. working in Ethiopia, identifying villages, key characteristics, supporting decision making for governments prioritising which health centres should be electrified as a priority); corporates and companies (e.g. SHS companies and microgrid companies; identifying the best targets for expansion and for site selection, for example with PowerGen)

(32:30) Which factors are the most important for siting mini-grids and new locations: looking at anchor loads, infrastructure information, average income, ability to pay, etc. Villages as their unit of analysis; the cultural boundaries to their analysis

(35:20) The capabilities and analytics that VIDA can provide; the appeal to a broader customer base and other industries (e.g. agriculture, health care etc.) 

(38:50) Why a data-driven approach has not quite taken off as quickly as we would expect; the need to embed within business-as-usual processes

(43:00) Their partnerships and relationship with other organisations, e.g. Odyssey Energy Solutions, Applied AI 

(48:00) The need to look out for biases that may be integrated in the analytics and models

(49:45) Where the name Village Data Analytics comes from

(51:30) Tobias' book on Indian politics: Nation-Building and Foreign Policy in India

(52:00) Advice: get hands-on experience in the industry; work with funders and financing providers

(55:00) Prediction for next 5 years: Great optimism; lots of entrepreneurship and falling technology costs; improved regulations 

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CEEW: company website

Abhishek Jain's Nature article on LPG and clean cooking

Abhishek Jain: 12 (not so) obvious insights about distributed renewables for productive use

Show notes:

(2:00) What is the need for clean cooking and why solid fuels are an issue; the public health impact of solid cooking fuels

(5:00) The clean cooking solutions that are available: Biogas, LPG, Electricity, Natural Gas (BLEN); the contentious research around improved cookstoves in contrast to clean cooking

(7:30) India's focus on LPG to provide clean cooking solutions; LPG's history in India and its penetration to rural India 

(11:00) Affordability as the most significant barrier to widespread adoption to clean cooking; cultural and behavioural elements to changing behaviour; 50% of rural households are now using LPG

(13:30) Four key recommendations: 1) Additional nudges and incentives are required 2) Community norms are very important 3) Households with cattle are less likely to transition 4) Household with irregular incomes are less likely to transition to LPG

(19:00) Fuel stacking, and using multiple sources of energy 

(21:40) 12 (not so) obvious insights about distributed renewables for productive use 

(21:40) 1. The market opportunity is BIG

(24:10) 2. But the market is hard-to-capture

(26:00) 3. It’s a game of value, not volume

(27:55) 4. Energy efficiency is the key

(29:40) 5. End-user financing and service-oriented business models would be game-changing

(31:30) 6. For manufacturers: It is hard to survive on a single product

(33:00) 7. For deployers: Sustaining a single product portfolio would be unviable

(33:00) 8. To survive on a single product — vertical integration is the way to go

(33:00) 9. There are no big manufacturers for most productive use appliances

(35:10) 10. Market signals are weak. Only the perseverant and networked can succeed

(36:45) 11. Distribution channels are not apparent, but existing

(38:30) 12. Keep in mind the big picture: A new rural economy

(39:00) The impact of COVID-19, the potential to focus efforts on a rural economy; impact of disruption in value chains; the potential to innovate during COVID-19; the trauma of returning to rural areas during COVID-19 lockdown. 

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Show notes:

(1:40) Introduction to CEEW, the Council on Energy Environment and Water - a not-for-profit think tank. Abhishek's focus on energy access, productive livelihoods, and food systems

(6:00) Their work in international topics, outside of India

(7:45) India's energy landscape and the significant progress in recent years: estimated 97% electrification rate in India; improving availability (~21 hours/day) and the ongoing need for reliability

(10:45) Most electrification conducted by the national, government-led efforts; ~0.5% of population received electricity from decentralised energy solutions

(12:45) Powering Livelihoods program, focused on productive energy use and solar powered solutions, in partnership with Villgro; working with existing enterprises to expand their deployment (focused on agribusiness and textiles); collecting data to provide evidence for the viability of the sector

(16:30) The types of solutions they work with: solar water pumps, cold storage and biomass, drying machines, sorting machines, processing machines, expelling machines; spinning machines, solar looms etc. The pipeline of solar powered productive energy use appliances

(21:00) Supporting the enterprises to adapt to a post-COVID environment; engaging with government agencies and financial players

(23:30) The focus on gender within their work: ensuring greater gender inclusivity in their program

(25:00) Existing limited irrigation in agriculture; the diversity in groundwater health across India - some areas are facing water stress, but other areas have the potential to improve their use of water resources

(28:40) CEEW's tool to assess whether water pumps should be used in a specific areas, and what additional technologies should be deployed alongside water pumps

(31:00) Dual electricity distribution network: one for agriculture and water pumps, one for household use

(33:00) Water-as-a-Service solutions and business models

Recorded in June 2020

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Show notes: 

(1:10) Waringa's background in the development sector, gender equality, and her desire to work in reducing poverty. The focus of Village Energy in increasing revenues and incomes

(3:30) Village Energy's focus on customised installations for productive energy use; working mostly with businesses (schools, SMEs, health centers)

(6:30) Most of their customers are off-grid, replacing diesel generators; some customers are looking for greater reliability

(7:40) The use of remote monitoring to ensure the solar system is being used correctly, not being overused and reducing the quality of the battery; can provide alerts for upcoming payments

(10:51) Village Energy's hub and spoke model: the need for local offices to build trust with customers, provide reliability and engagement with customers

(14:20) Waringa's experience becoming a new CEO; the contrast of working in business vs. the development, non-profit sector. The social impact of Village Energy's work in changing the lives of their customers

(18:20) Village Energy's business model as fully for-profit, however some customers find additional sources of funding from grant sources; schools and health centers which are able to provide better services due to access to electricity. The benefits of street lighting to provide greater safety

(21:15) Their experience with Binance Foundation, installing solar for schools - working with cryptocurrency

(25:15) The contrast between Kenyans and Ugandans: Kenyans being more straightforward and direct; Ugandans being very polite and kind

(30:30) The interconnection between gender and development, and energy access: the importance of gender and equality, dirty cooking fuel's impact on women; the ability for energy access to provide additional income for women; the lack of DC productive use appliances that are focused on women's needs 

(37:00) Their goals for the coming years, to grow their current business; to install 1,200 systems

(38:40) The impact of the solar off-grid sector

(39:40) The need for patience in the solar sector

(40:00) The need to make difficult decisions earlier

(41:10) Recommended books: The Hard Thing about Hard Things, by Ben Horowitz; Building a Cash Cow in Kenya by Nat Robinson; How Will You Measure Your Life by Clayton Christensen 

(43:30) Their excitement about Li-ion technology that will enable the solar sector to change and improve their business model 

Recorded in June 2020

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Show notes: 

(1:30) How Manuel got into the energy and solar sector; how he started Iluméxico after working at GE's wind division

(5:00) Energy access and electricity sector in Latin America, how the market differs from the energy needs in Sub-Saharan Africa and Asia

(7:15) Iluméxico's business model and product offerings: 

Tier 3 & Tier 4 solar home systems for households, large energy systems that can be upgradable 

Last-mile service company, with a utility business model 

PAYG payment options in remote regions without connectivity requirements

Remote monitoring capabilities for energy systems

(13:10) Their decision to develop their own hardware and software solutions, or to partner with other providers; the development of their new product, El Colibri 

(18:00) Their progress to date, and the impact on customers and communities; their rapid scale in the past two years, installing over 24,000 systems; their partnership with government to reach last-mile customers; productive energy use and benefits of electricity

(23:00) The benefits and drawbacks of working with government agencies: the ability to reach customers more quickly, subsidising the cost of solar systems, the emphasis on development but poorer payment rates. The actions of recent government policy changes in the energy sector, and the impact on Iluméxico 

(29:00) The progress towards 100% electrification in Mexico by 2025 

(30:45) About rural, remote communities in Mexico; low income, primarily indigenous communities; their current reliance on diesel and candles 

(33:40) Their experience in the Colombia; their work in Colombia with higher energy users 

(36:20) The need to build trust with rural communities; not taking any payments until devices are installed; avoiding affiliations with political entities

(39:10) The biggest challenges within the off-grid energy sector (there are many!); the need to focus on portfolio management, ensuring high repayments from customers

(43:30) Financing for Ilumexico, between debt, equity and grants; the unsuitability of VC funding in many contexts; the need for grants and subsidies to reach some of the most remote customers

(47:00) How to ensure higher customer repayments; looking at data (but with limited results); customer segmentation and ensuring high quality customers; focus on service provision; the need for flexible payments

(51:30) Their work around productive energy use: providing refrigeration services; agri-processing; connectivity; schools and health clinics

(53:40) Their goals for the coming years: looking to expand to other countries in Latin America, other last-mile electrification opportunities even in the USA

(56:50) Where the name Iluméxico comes from

(59:15) What Manuel does when he's not working

(1:03:00) Nancy Wimmer's Green Energy for a Billion Poor

(1:04:00) Advice for an entrepreneur or investor

(1:05:00) Predictions for the next 3-5 years: the significant impact of failure in the off-grid sector, the challenge of proving the off-grid business model; the potential for the future through partnerships 

This is the shorter version of our conversation; full conversation available also.

Recorded in May 2020

Visit us at www.distributingsolar.com

Contact us at podcast@distributingsolar.com

Recorded in May 2020

Visit us at www.distributingsolar.com

Contact us at podcast@distributingsolar.com

Show notes

(1:30) Henry Louie's background, how he started working in the off-grid energy industry

(6:00) Background to the textbook: intended audience, why he wrote the textbook, and the need for a single textbook to pull together the key technologies and concepts for off-grid energy sector

(11:00) Typical sources of training for people working in the sector

(14:30) Other types of training events that Henry Louie has provided, and what he typically covers

(16:40) Factors to consider when selecting the generation source for off-grid systems (considering wind, diesel, solar etc.)

(22:50) Common misconceptions or misunderstandings encountered in the sector (over-engineering systems, over-reliance on surveys to estimate electricity load) 

(29:20) His work with Kilowatts for Humanity (KWH); reasons they separated the non-profit from the university and the importance of ensuring long-term commitment to off-grid energy projects; the importance of using local installers; how to ensure sustainability of off-grid systems 

(37:50) Quick introductions to some electrical concepts: 

AC-DC coupling 

Load factor

Grid tied inverters

Bypass diodes

(41:40) Process of writing the textbook

(44:50) Other considerations for off-grid energy systems, e.g. use of donated equipment, ensuring the use of local installer companies and the need for capacity building, the potential unintended consequences of good intentions. 

(52:40) The choice of 'developing countries' for the title of his textbook

(55:30) How to access a copy of the textbook

(56:20) Where the name KWH came from

(57:15) Recommended books: Out of Poverty by Paul Polak; The Impact of Electricity: Development, Desires and Dilemmas by Tanja Winter

(59:15) Hopes for the off-grid sector in the next 5 years: the need to discuss e-waste; the ethics of switching off systems when payments are delayed.

Recorded in May 2020

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Show notes: 

(1:35) Andreas Lehner's background and how he came to start Trine

(4:25) Trine: how does it work and what do they do

(6:30) Alternatives to debt financing for solar in emerging markets: primarily high-interest inflexible funding from local banks, or philanthropy and donations

(8:55) Trine's flexible financing approach, e.g. just-in-time financing, with more efficient deployment of capital 

(10:30) Offering match funding, co-funding with institutional investors, first-loss and guarantees to investors

(15:45) Trine's early days and their plans for their coming years: how impact investing will become the new normal

(18:40) Social and environmental impact of Trine's borrowers, in particular for BBOXX in the Solar Home System (SHS) space

(21:30) Trine's partners, e.g. BBOXX, Greenlight Planet, Yellow Solar, Kingo, Daystar Power. How their partners work with Trine and the due diligence process (usually 2-3 months from start to finish)

(26:30) How it works for retail investors

(30:15) Trine's growth: balancing between both sides of the marketplace of borrowers and lenders

(32:00) Their customers, repeated customers and investing behaviour

(33:40) Geographical focus and countries they've invested in; their interest in the mini-grid sector and West Africa

(35:40) Learnings as a founder and a company

(39:45) Merging commercial and retail investors; expanding to commercial and institutional funders to increase their impact

(43:45) Trine's equity fundraising for themselves as a company

(45:20) Trine's longer-term vision and plans

(47:00) Andreas' perspective on the sustainable and impact investment landscape; the need for a new way of investing 

(50:10) The impact of COVID-19 to date (as of May 2020) 

(53:00) Where Trine's name came from

(53:45) Advice to an entrepreneur: focus on your customer; reach out if you want to learn something

(56:40) Predictions for the next 5 years: consolidation in the off-grid sector; growth of the mini-grid sector; C&I sector; productive use of energy. 

Recorded in May 2020

Visit us at www.distributingsolar.com/podcast/smart-power-myanmar

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Show notes: 

(0:55) Richard's background and prior work in Myanmar

(2:30) Introduction to Myanmar, its geographical, economic, and political background

(8:05) Myanmar's electricity sector, progress in recent years, and electrification targets

(11:40) Smart Power Myanmar's approach to accelerating electrification in Myanmar

(13:55) Smart Power Myanmar's strategic focus and identified barriers to electrification 

(18:12) Approaches to providing commercial and consumer financing adopted by Smart Power Myanmar - equipment financing facility and the Energy Impact Fund

(21:35) The origins of Smart Power Myanmar, and how the organisation came about

(26:30) Overview of the Decentralised Energy Report for Myanmar

(32:10) Minigrid operators, ESCOs, funding and subsidies for minigrids in Myanmar, and progress to date

(35:45) Hydro minigrids in Myanmar 

(37:45) The integration potential between private minigrids and the public national grid

(40:30) Productive Energy Use in minigrids, and the need for consumer financing solutions to support Productive Energy Use

(44:50) Examples of productive energy users who have benefited from Energy Impact Funds

(48:05) The impact of COVID-19 in Myanmar and for the energy sector

(49:20) Recommended books: Hariri's Homo Deus, Richard Rhodes' Energy: A Human History, Gretchen Bakke's The Grid

(51:00) Goals and hopes for electrification the next 5 years 

Recorded in 2019

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Show notes:

(0:55) Introduction to Leslie Labruto and how she got into the clean energy sector

(2:20) Introduction to Acumen, their higher risk approach to investments, and commitment to the poor

(3:30) Overview of the off-grid solar sector: pico appliances, solar home systems (SHSs), mini-grids -- the ongoing challenges around mini-grid business model

(6:20) Discussion of the investment landscape in the off-grid solar sector, contrasting Mobisol, d.lights and positive signs from new funds (e.g. KawiSafi and Sunfunder); the need for more early stage investments

(9:20) Acumen's approach to patient capital, investments, 1x returns -- what they look for in an investment

(12:35) Acumen's energy investments to date; the challenge and need for solutions around clean cooking 

(14:30) Productive Energy Use: the opportunities and need for solutions that can support income growth; their focus on Pioneer Energy Investment Initiative (PEII) 

(17:30) The commercial viability of the off-grid solar sector, the need for operational excellence, strong unit economics for successful companies

(19:11) Considerations around exits in the sector: the need for secondary sales to support the growth of the investment sector, the catalytic effect of secondary sales; the role of strategics (e.g. Shell, Total, Engie) in the sector

(22:20) The intentions and interests of strategic, corporate investors in the energy access sector

(23:50) The challenges for the mini-grid sector in particular; the ability for mini-grid sector to target poverty alleviation; the need for subsidies in the mini-grid sector and reframing of mini-grids as a public good

(27:00) Results-Based Financing: demand from investors for RBFs

(29:15) Lean Data, 60 Decibels, and focus on customers to determine the social and environmental impact of products and services; the use of Lean Data for due diligence purposes

(32:50) Geographical areas of focus for Acumen

(35:10) Predictions for the energy access sector: the need for reliability and developments in some geographical areas

Recorded in 2019

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Contact us at podcast@distributingsolar.com

We discuss:

Nicholai's background and why he entered the solar intdustry

LIB Solar's business model and community-driven approach to solar

Liberia's energy infrastructure and economic challenges

The opportunity in serving hard-to-reach markets and the importance of a community dynamic

Their deployment of minigrids and standalone SHSs

LIB Solar's approach to productive energy use and the structural challenges that remain

The tension between social and environmental impact when serving rural off-grid populations with solar energy solutions

Their approach to funding, focusing on debt and grants - rather than an equity, VC funding model

Show notes: 

(0:35) Nicholai Lidow's background and how he started working in the solar sector (via rebel group research!) 

(1:25) LIB Solar business and go-to-market approach

(2:45) Background on Liberia, the energy infrastructure, and the potential for solar energy

(6:30) LIB's business model: focus on particularly rural areas; "an African company using tech to scale"

(9:30) The cost of a solar system to a customer, a longer payback period, and the benefit of using the US dollar in Liberia

(11:55) LIB Solar's shift from a mini-grid approach to a solar home system approach; the downside of a community-based approach when some customers can't afford to pay

(16:30) LIB Solar's payment collection approach

(18:40) Productive Energy Use: the benefits of solar and lighting, but the less-discussed limitations of using solar to significantly approve the long-term livelihoods of rural communities

(23:50) The tension between environmental impact and social/poverty impact for off-grid solar 

(27:30) LIB's focus on debt financing rather than equity financing; Why off-grid solar companies are not tech companies

(32:30) Their plans for growth in Liberia, growing geographically and across other product lines

(37:30) Books on rebel groups, and the lessons from rebel group structures that can be applied to off-grid solar

(41:00) Advice for new entrepreneurs: good opportunities for local entrepreneurs and niche markets, amid industry consolidation; why there are so many foreign entrepreneurs in the African solar industry

(42:50) Predictions for the sector: Basic solar lighting will grow more quickly than we expect, and the need to shift from pure solar, to financing and distribution of other products

Recorded in April 2020

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We discuss:

Uganda's energy and solar landscape

Enlight Institute's training provision and its growing focus on soft skills training

The human capital challenges faced by many solar companies

Enlight's business model and social mission 

Enlight's approach to coaching as a form for employee training and development

Show notes: 

(0:55) Jay Patel's background and how he came to work in Uganda and solar industry, following his time at Google's sales team

(3:05) Introduction to Enlight, the need for human capital, and Enlight's development of a solar academy

(5:08) Overview of Uganda, and the energy and solar industry in Uganda

(11:40) The transition of the off-grid sector from impact and philanthropy, to commercial and private sector; the challenges and dilemmas for the sector in reaching the poorest in society

(15:35) Enlight's evolution from focusing on technical skills to soft skills and on-the-job training; the need for human capital in the solar industry, and the social cost of the lack of training 

(20:50) The shift in go-to-market strategy from individual youths, to working directly with companies and training their team

(24:55) Enlight based in Uganda, but looking further afield

(26:00) Technical training overview

(28:13) Enlight's business model, their use of grant funding and longer-term aim of profitable job coaching

(30:40) The challenges around high staff turnover in the sector, due to lack of training, or cultural issues

(31:55) Enlight's team and recruitment approach, from Acumen's fellows etc. 

(34:20) Vertical integration vs. value chain fragmentation within the solar sector 

(36:05) Challenges of financing in the solar sector

(39:13) Growing Enlight's business and using data to prove the value of on-the-job coaching

(41:00) Jay's recommended books and sources: Green Energy for a Billion Poor; Sun Connect News; Next Billion

(42:00) Advice for new entrepreneurs looking to enter the space: start engaging with the community and think about where you can add value

(44:15) Prediction for the next 5 years: the distinction between on-grid and off-grid will start to breakdown

Recorded in 2019

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Show notes

(0:40) Introduction to Futurepump and how they got started with a solar steam pump and transitioned into a solar PV pump

(2:20) Overview of the SF2: reciprocal piston pump

(3:00) The need for irrigation pumps for smallholder farmers and alternative irrigation methods

(4:20) The economics of a solar water pump; entrepreneurial ways to improve the RoI of a solar pump

(6:30) The costs of a solar water pump vs. diesel or petrol water pump; the additional time costs of acquiring diesel and petrol; Futurepump's approach to providing a warranty on their products

(9:00) Futurepump's provision of a five-year warranty for their devices; importance of building consumer trust

(11:10) Their go-to-market strategy to reach their customers and scale quickly; working with Tier 1 and Tier 2 distributors

(14:50) Financing solutions for the products; the remote monitoring control and data collection from water pumps; payment solutions offered via Tier 1/2 distributors

(17:00) The moral questions around switching off solar water pumps if farmers are not able to pay their instalments

(19:20) Surface vs. submersible water pumps: Futurepump's focus on surface water pumps

(22:50) The social and environmental impact of their devices: carbon emission reductions by avoiding petrol and diesel pumps; freeing up time for women and children instead of manual irrigation approaches; improved (solar) flow rates for solar water pumps 

(26:40) The challenges around distributing the solar water pumps; logistic challenges; cost barriers - the need to reduce the prices of devices

(28:50) A new, smaller, cheaper product recently launched; considering direct sale approaches to reduce costs further.

Recorded in 2019

Visit us at www.distributingsolar.com

Recorded in 2019

Visit us at www.distributingsolar.com

Recorded in 2019

Sanmi: My name is Sanmi Lajuwomi. I am Nigerian of origin and I am the founder and CEO of Winock Solar Limited. My background is in IT, particularly in project management. I studied in the UK. I went to University of East London and then took some extra courses at City University and in the course of doing IT, I started to look at what was out there in terms of how I can impact Africa. One thing that I saw clearly that was slowing down economic growth and really stifling information is the lack of electricity. So, I said, “What can I do in this space?”. In 2013, doing research, I discovered that solar is the answer. I was happy that solar was the answer because I am also very environmentally friendly. I believe that we are custodians of Earth and we have the responsibility to ensure that we leave a safe planet for future generations. So, I got into solar in 2017 and started Winock Solar in Nigeria with my partner Arinzi.

So, while Arinzi and I were starting we said, “Where can we really add value in Nigeria using solar?”. And then we looked at the 90 million people and we said, “Actually the people that make the wheels of the economy turn in Nigeria are the micro businesses” - they contribute about seventy percent of the GDP and they are also the largest employers of labour- “but do they really have challenges with electricity?” We said, “Okay, we'll find out”. We started off by first designing a market survey. We surveyed about 500 businesses and said hey, “What's your challenge with electricity?”.

We were absolutely astounded at what we found. We found that the majority of these micro businesses, of which there are 37 million in Nigeria, rely only on petrol generators and those that see some electricity from the grid barely get it. So, for example, the guys that see it, some of them in Dei Dei Market only get it for five or four hours a day on a very good day.

Sometimes, for example during rainy season, they do not see electricity for days. So, they are spending money on petrol generators now. Apart from the fact that due to the lack of stable electricity they have to rely on petrol generators, there are major problems with generators themselves. The first one being the effect on the environment. The size of generators that these micro businesses use emit around 1500 grams of CO2 per kilowatt hour. The second problem is that the cost is very prohibitive in terms of getting into business. They cost about 40 cents per kilowatt hour. The third problem is that these generators are very dangerous. They emit carbon monoxide. According to a World Health Organization report that was done in 2015, about 600,000 Africans die annually from carbon monoxide inhalation -not just from generators, also from cooking and other sources like that.

So those are the problems that were identified. Now we said, “Okay. What sort of solution can we introduce to solve this problem?”. Because if we eliminate the generator then we eliminate all these problems and if we provide solar we provide stable electricity. The real problem now was, imagine: these people, even though they have stable cash flow, don't have the capital upfront to buy the solar system which is about a $1,000 each.

You can imagine a business person that earns the equivalent of $300-$400 a month. And you are asking them to buy a $1000 system upfront. So we said we would provide them systems at no capital upfront, which is leasing it to them. And we designed two systems: 1 kilowatt and 1.5 kilowatts, priced at $14 and $17 respectively per month.

We said to them, “Would you be able to afford this?”, because in Nigeria, there is no data. So you just have to trust, you have to trust that they will be able to pay. So we started off in January 2017 precisely rolling out this model with a gentleman named Suleiman who is the head of The Barbers Association in a place called Karshe.

I'm happy to say that two years on Suleiman is still one of our best customers. Suleiman vouches that the system has improved his life drastically. How? Suleiman has saved 70% on his electricity cost- just the cost versus the generator upfront, not including the ongoing cost of petrol. I guarantee you if you see him now compared to years ago, he looks healthier because he used to keep the generator in shop. Can you imagine all the smoke and what that would do to your skin? Suleiman is a biggest champion of Winock now.

To date we've been able to self-finance over 150 kiloWatts of power. That equals 80 customers’ distributed systems. So that is it in a nutshell. Now we are looking to scale and are looking to see how we can help more people. Our mission is to ensure that clean energy is available to all, because they are over 1 billion people that don't have access to electricity.

We can give them clean energy and that will help in reducing carbon emissions. So that is what we are doing.

Distributing Solar: For people who've never been to a local Nigeria Market, can you just give a bit of an understanding of what a micro business is and what your typical customers look like so that people can really get a bit of a flavor of how this is changing their lives?

Sanmi: So according to the Nigerian Bureau of Statistics, the micro business is defined as a business that employs no more than 10 people. In the market you have different varieties of business. The most common businesses that you find are barbing salons or hairdressing salons, tailors, and mobile charging companies.

Distributing Solar: So that's been a fantastic overview of what you've been doing for the last two years. Can you tell us a bit about what your goals are for the next five years?

Sanmi: For the next five years our goal is to become the number one Solar Company in Nigeria. That's the overarching vision. Now, how do we reach that? For micro business segments we want to have saved about 50,000 businesses by 2024.That's what our goal is.

Distributing Solar: And you mentioned that you used to live in the UK. You currently have a team that split between the UK and Nigeria. How has this been working? What are the advantages and the challenges involved?

Sanmi: We have a team in London and in Abuja. So far it’s been going fine, I myself only returned to Nigeria two months ago. That's why I still sound like the queen. Before I returned the business was running for two years, and it was actually being run by the local team. We had four people on the ground. The challenge has been the internet speed in Nigeria. It is getting better but two years ago it was really bad. Doing video conferencing and all of the communication in general was a challenge, but with persistence and with courage we've been able to make it work.

Distributing Solar: It sounds like it was working really well. How have you seen a change in you and the company's direction now that you're back and you're really immersing yourself with your local customers?

Sanmi: It is difficult to make correct assumptions about what was working really well without being on the ground because previously I'd come to Nigeria maybe four times a year, but only for a few days each time. I wasn't able to get a full picture of what was happening.

So being on the ground over the last two months I took my time to see to the customers, understand how the system has been for them, and understand what challenges they've been facing with it.

I was able to get real actual data on the ground. And in terms of the team how has it affected them? Their morale has been seriously boosted. First of all, I don't run the company like another Nigerian because Nigerians are very hierarchical, and they use the word sir for senior people.

So I banned the word ‘sir’ in the company. It's very refreshing for them to see a different way of running business, which is like a UK way. I find that by running it more like a startup in Silicon Valley they are able to express their ideas and you'll be surprised what these people, even though some of them have never been out of Nigeria, what they are expressing in terms of great ideas that can be useful anywhere in the world.

Distributing Solar: What are the upcoming projects you are most excited about and how do you prioritize your products and potential customers? How do you think about that landscape of solar opportunities?

Sanmi: Nigeria is like a basket of opportunities. If you try to pursue everything you find out you run out of breath quickly because there are so many opportunities.

We knew that from the onset and that's why we initially started focusing on the micro businesses. Now we recently added EPC and O&M for residentials that need between 650 Watt and 10 kiloWatt systems and a third leg is government projects which are going to be constituency projects.

The three segments of businesses have different requirements and resource allocation needs. For the micro business, for example, we rely on external capital. When it comes to that, we define it very clearly and it just really is about ensuring that we are documenting our work correctly for investors, providing information, and engaging investors. Whereas for the residential segment it is about marketing and getting customers that want to install. The government segment is about building relationships and tendering to secure contracts to install for government. So they are really different segments.

Distributing Solar: There seems to be a huge amount of appetite for solar power Nigeria, just as I was getting my Visa for Abuja I spoke to at least three people in the queue who were really excited about solar power and asked me how they could get solar power for their own homes. What do you think are the major challenges or hurdles towards greater adoption of solar within Nigeria?

Sanmi: I mean, I'm very happy that you're seeing that actually everyone is championing solar energy in Nigeria. Even the little kid on the street knows about solar now. But before I touch an answer in terms of the hurdles, I'll just quickly touch on why that attraction is there in Nigeria.

The grid situation is very poor. You have a national grid supplying 4,000 megawatts of generation capacity. And the demand is 180 gigawatts. So you see the gap is massive. Now, in Nigeria, the main driver for solar is the fact that solar is or the clear solution to the electricity problem. That's why everyone wants to learn.

So, what are the major hurdles? The major hurdle is that solar- for the distributed systems or even the mini-grids -is capital intensive. Willpower as a whole is a very capital-intensive industry and access to capital is a major problem. So that will be the main challenge.

And the other challenges are that there is a lack of understanding of proper execution of solar in Nigeria. We don't have a lot of people have the technical knowledge to deploy solar. That's the other challenge.

Distributing Solar: Do you have any comments or observations on the general difficulties of getting financing within Nigeria whether it be for solar business specifically or just as a startup?

Sanmi: The general difficulty is that there is little capital in the country itself, even though the country is very rich with natural resources a large population of the country are not productive. So, the country itself is not that rich.

Then the second challenge is that the banks charge very high interest rates up to about thirty percent -and that's with collateral by the way. It's a great obstacle then for someone with a great idea and a lot of confidence and positivity because the banks don't buy that. They only want to see that you can pay the 30%.

The third thing is that a lot of capital comes from outside of the country. But in recent times Nigeria has been in a recession, although the country's back into positive. GDP growth I think is about 2% as of last quarter. So that's a good thing. But as of three years ago/two years ago, we were at negative growth. So, a lot of investors started pulling out. Even those that were in the country already started pulling out their capital. So those were the challenges: One, the country is not that rich that the government can really support initiatives, two, the capital providers locally make it very expensive, and three, because of the recession, capital inflow has been very slow.

Distributing Solar: I think for a lot of people who don't understand the country in detail there's a large perception of risk around political climates, around corruption, and around number of different areas that I think scares away a lot of otherwise very sensible investors, and there's a lot of obviously very exciting opportunities. I was wondering if you could shed a bit of light on what it is really like? You know, how do people understand that and where is that gap between the perception of risk and the actual risk that is to be encountered here?

Sanmi: That's actually a question that's very much at my heart. And I sometimes ponder and try to find how to try to understand the whole picture because I'm very much into philosophy. I will first of all tell you the philosophical challenge and then I'll tell you what is the perception and what's real and what's not.

The challenge is that Nigerians as a whole are short-term thinkers, right? Because naturally people think short term. So they don't think of the long-term impacts of actions. They mainly think of what is in it for me now and because of that you find that a lot of people would probably just be dubious. That's the honest truth.

So there’s lot of dubious Nigerians that’s the clean honest truth. Now is it Nigerians that are dubious or is it the environment that creates dubious Nigerians. I think it is the latter because now in America Nigerians are the highest median income earners. So that shows that we can actually be very positive. So, really that's the challenge.

Now, in terms of what is the perception? I think the perception is far far larger than the reality. Yes. There is a risk, but the perception of the risk from Chinese whispers has been blown largely out of proportion, right? I grew up in Nigeria. I haven't had more challenges. I love Nigeria. I don't think I can live anywhere else again.

The risk of doing business is not as much as people perceive, but I do think though that what could have actually increased the perception is that there have been a lot of fraudulent people.

We call them 419 in Nigeria that go around presenting themselves as legitimate business people, but if you look at it, if someone comes to you and says that you can earn 200% in a year you as an investor should question it very well. What I'm saying is that the risk is there just like anywhere in the world in America we’ve had the case of the likes of Madoff etc. it can happen anywhere. But in Nigeria, especially because of lack of data, please do your due diligence very well. But if you do your due diligence very well, I can assure you that you are in safe hands.

Distributing Solar: That's really interesting and thank you for shedding light on that. I think what’s a really insightful moment you struck upon was talking about short-term thinkers. And I think we take it for granted often the luxury to be able to be long-term thinkers. Now a bit of a challenging question. I suppose is that the solar model relies on long-term plan. As you've mentioned it has a high upfront capital cost and then it's a long game, right? As in once it's paid off it is very profitable. However, how do you then balance where your customers are short-term thinkers, but your business model is a long game?

Sanmi: The first one is luckily in Nigeria the cost of capital for solar is much lower than other areas because of the high irradiation. So it's not as long term as it would be in other places in the world. Then, the other thing is that luckily as much as Nigerians think short term, they value electricity so they wouldn't want to do anything to jeopardize the opportunity to have stable access to electricity.

So in fact to give you an example, we had a customer in the early days that went to marry a second wife - I'm just telling a Nigerian scenario - and then his capital got stretched. He did a big wedding and they can't afford it. So, he wasn't paying us for three weeks -because we charge weekly- so he didn’t pay for a month. So, we wanted to remove our system and he was pleading and saying, “Please don't remove the system I’ll clear it today I'll clear the arrears today because it will be very very shameful that I have stable electricity and all of a sudden I don't have it anymore because of my action”.

What I'm saying is that the psychological reason why they sometimes may default is actually the same reason why psychologically they won’t because they don’t want any shame. They wouldn't want to lose that benefit. Now from an investment perspective, as an investor Nigerians are very used to access to short-term capital, right? So because of that short-term thinking as well, you can come in and give a loan for short-term and make your money back quickly. So that was my longtime game. So, let's say one year, two years rather than say, the 25 years that they do in America.

Distributed Solar: Great. And so you mentioned some dubious actors. Can you give some examples of dubious actors within the solar industry? We've heard stories about people photocopying solar panels for instance and batteries that have been repackaged and branded as new. Tell us a bit more about what it's like on the ground in Nigeria.

Sanmi: Just to clarify actually these dubious actors actually just part of its global syndicate. They partner with Chinese and Indians and people of other origins. The first thing they do is- the first level- is that they import subpar products because Nigerians typically think of cost, right? They don't typically think of quality. So, when you are selling to somebody, they just say, “How much is it?” and then they pay you and then tomorrow it's not working.

These people know that, and they take advantage of that to import subpar products. To give you an example, initially when we imported from China when we were buying the guy said, “Should I give you the Nigerian price or the UK price?” what does that mean? He meant quality wise so they are used to Nigerians that buy low quality.

Then the second thing is that there are also people in the business that take old batteries, recycle them, and then they sell it on to customers as new. Now this is actually a very bad practice because with recycled batteries, let's say with gel batteries typically in Nigeria they last two years.

If you recycle a gel battery, let's say it lasted three years the first time, you can’t really tell how long it's going to last a second time. It's a gamble. So, you're selling someone something that might last two years or it might last one month. And as you mentioned the photocopied solar panels, etc. Those are the sort of acts that we see with dubious players.

Distributing Solar: And how do you avoid that as a company? How do you make sure you don't fall into some of those traps?

Sanmi: Usually, sadly it's actually the companies that perpetrate these acts. But as a buyer, procuring from companies, the first thing we've done is that we've struck an agreement with a very reputable distribution company that is trustworthy. They help us in checking our components before they come to us and they give us a long-term warranty that's longer than what you typically get as a Nigerian company. So we reduce our procurement risk in that sense.

The second thing is that we have a rigid Q&A process that ensures that before we go and take it out to the customers, we do our checks. We bought equipment like battery testers etc. Even though we are a small company we are thinking like a big company. We do our Q&A.

The third thing is that when we do the installation, we spend some hours looking at the behavior of the components to see that it is actually behaving the way we expect. An example is that if you charge a battery based on the design of your solar system, you expect the battery would last six hours after sundown. If the battery lasts two hours, that's a telltale sign that this battery is really bad and then you need to change it. In a nutshell with the risks by signing an agreement with a distributor the agreement favors us and then our Q&A process is very rigid.

Distributing Solar: So there was a major election in Nigeria earlier in the year. It will be great to hear how the election and its results have impacted the solar business and what the impacts are on politics and energy.

Sanmi: The first thing, just a general observation as a Nigerian with this election, Nigeria was one of the countries that had notorious military leaders. But since 1999 we haven't had any fear or threat. So the democracy is pretty much stable now just like in a stable countries most or advanced countries like the UK or U.S. You have two parties majorly in the UK, Conservative or Liberal, in the U.S. you have Democrats and Republicans, and Nigeria you have PDP and APC.

Also, typically the alliance to a candidate was usually driven by either religious or tribal sentiments. But for the first time we had an election that was driven by purely by, “What can you do for me as a candidate?”. So Nigerians are becoming more politically mature. That's a good thing.

Now in terms of solar, how does it affect solar? The president in his first four years, he introduced an organization called Rural Electrification Agency (REA), which is a government parastatal that is given the mandate to see how they can -how the government really can- help with catalyzing access to clean energy, not just any energy in rural areas. Now that initiative attracted the backing of the World Bank with over 350 million dollars loaned. Recently African Development Bank also just announced another I think 200 million dollars loan to the Lagos government for areas to implement projects and majority, about 90%, of these projects are solar projects. So that's a good thing for the solar industry. The REA through World Bank provides grants, sometimes 50%-70%-80% depending on the project, to solar companies and then solar companies bring in the rest through private investors and this is actually helping open up doors in the industry.

Now historically Nigerian governments have been known to, whether it’s real or not, the hearsay is that they’ve been known to be contributors to the delay in solving the electricity problem in Nigeria. So, it's very good that we have a government at the moment that is pro electricity access for the citizens or for the Nigerians.

Distributing Solar: It's really great that at the top level you're seeing a big difference. But often in Nigeria, we hear that there is a lot of difference between the national level and then the local level of government. Do you still see that difference or is that bridge getting smaller? Whereby we are seeing that gap reducing and therefore the local government are actually implementing on the national scale. Or are there still challenges at a local level? And what would you recommend in terms of ways to then influence those local areas to make them more aligned to the vision of the country as a whole?

Sanmi: The challenge is that Nigeria is a very large country and has a large population of people that are not educated. It actually has the lowest literacy rates in West Africa, sub-Saharan Africa as a whole. As a result it's very difficult to get things done because you really have to engage people and explain to them that you're doing good for them at the local level etc. That's the first thing the engagement is difficult.

The second problem is that Nigeria has a federal stock structure where everything is controlled by the federal government. So, the state governments and local governments are not really empowered to take initiatives and develop projects by themselves without Federal approval. How that came about was that majority of the revenue started coming from oil so all the money flows to the federal and they channel it so then the states submit projects and say this is what I want to do with the money and the federal government approves it.

Now, how would I help to improve it? The first thing is that in terms of engagement the local governments are the closest to the people and they understand their mindset more. So, the local government should be empowered to start their own initiatives locally that can help to drive revenue generation, which would help to improve the quality of lives in that region. And then the state level should be allowed to implement statewide projects and then the federal government should just be like a regulator or referee rather than the people that control it.

The other challenge is that sometimes even though the government controls budget allocation, the states are responsible for the delivery of this project. You may have a situation where you see a road, a federal road, that is being built and they just stop here and say the state is supposed to continue from here today. It's really a mess in that sense. In a nutshell, the political structure needs to be redefined so that all tiers of government can be empowered, but there are reasons why that wouldn't happen because Nigeria is a very sensitive country. So if you empower some people what if they want to break away or you use the state police for nefarious purposes etc.?

Distributing Solar: What we're going to do now is just go through a few quick-fire questions and we want to really understand the man behind the company. Who are you? What makes you tick? So firstly, who's an inspiring character for you and really motivates you?

Sanmi: An aspiring character for me these days is Marcus Aurelius who's the guy that wrote meditations, the former Roman Emperor, and then there are other people like Aliko Dangote who is the most successful man of color globally and is Nigerian and a third person is Jay Z. On family level my father and my older brother really inspire me as well.

Distributing Solar: That's great. And can you tell us a bit about some books that you read that you recommend and really maybe changed the way you think of different things?

Sanmi: Look, unfortunately I'm a very boring guy! Okay nonfiction. I was gonna say I'm very boring guy. I don't read nonfiction. But some that have really touched me the number one book I recommend for everyone is the Alchemist by Paulo Coelho. It is about finding your personal legend, so I am actually on that journey. I see myself as an alchemist or about to become an alchemist.

Another one that really touched me was Plato’s Republic and what touched me there was when it was talking about the divided line. The allegory of the divided line really opened my eyes in terms of how I see the world. Another one that I recommend is Nigeria: A Hundred Year History, it's a really good book. A final one would be The Bottom Billion by a gentleman called Paul Collier who was an Oxford Professor. So, there's the books that have really opened my eyes.

Distributing Solar: So that is really insightful. What I’d really like to know is: obviously you're moving through your career and you've had over 15 years so far -still very youthful looking though- but what would be some advice you'd give to yourself 10 years ago if you looked back and went to your younger self. What would you tell yourself now?

Sanmi: What I would tell myself is the thought process that really got me to be who I am now which is that everyone is a researcher in the world. No one is born knowing anything. So just pick an area and try to excel at it. Don't worry about whether you know it or not or whether you make mistakes just do your best and something good will come out of it for the world.

Distributing Solar: And finally, do you have a lasting message you'd like to leave people on the African continent and Nigeria in particular?

Sanmi: I wish I could sing like Michael Jackson, but I can't so I'll just say, I'll just quote Michael Jackson, “We are the world”. We are the world and the butterfly effect is real. Anything that happens in the far corners of Africa is something that could affect the world whether without we like it or not because there are no boundaries.

We need to now get to a place where by rather than seeing any problem whether it's in Africa or Europe or the U.S. -because every country has its challenge every region has it’s challenge- we should know that it’s something that could affect us and we should care about it and see what we can do in our own little space to solve it.

Distributing Solar: Amazing. Well, thank you so much Sanmi that's been a fascinating interview. We look forward to watching Winock Energy grow.

Sanmi: Thank you very much for having us.