Off Grid Electric recently announced $45 million in debt financing for distributed solar and battery storage in Africa. The organization is installing over 10,000 solar power systems in homes and businesses per month. F. Xavier Helgesen is the CEO and one of the co-founders, and he answered some questions for CleanTechnica about the organization’s work.
How did you collaborate with the Packard Foundation, Ceniarth, the Calvert Foundation and the others supporting organizations to create the debt financing vehicle?
Any financing of this kind requires deep collaboration because you are doing something genuinely new. Lots of people know how to finance things like power plants and airports since they have been done for a long time. Nobody knew how to finance widely distributed home solar systems, so we had to figure this out from first principles. This required lots of negotiation, but also lots of constructive problem solving.
What will you do with the $45 million?
This financing vehicle is an impact investment dedicated to providing power to hundreds of thousands of homes and small businesses. The funds will directly finance the solar hardware and accessories that are installed in the customer’s home.
How do you measure the impact of the solar power systems you are distributing?
Lots of studies have been done on the impact of power on the lives of people, so we don’t have to reinvent the wheel. One well-known graph directly correlates power consumption with the human development index. So people live fundamentally better lives if their kids can study at night, and they can extend their workday (or social day). There are also substantial safety factors with home lighting that motivate our customers and improve their lives. Many put their largest light outdoors for security and safety purposes.
Do you have data about who your ‘average’ customer is such as age, income level, education level, health, marital status, and whether they have children or not?
Averages are incredibly deceptive in this regard. Our offering is adopted so widely that our averages are basically identical to the averages of the population. Most families are relatively large in East Africa (women have an average of over 4 children) and most people are relatively young (due to high birth rates and early parenting ages).
How do you find prospective customers and then educate them about how much better solar power and LEDs are for their health than using kerosene lamps?
We go out in the field. We have hundreds of full-time professionals who talk to businesses and homeowners about their energy problems and present solutions. We find that the biggest challenge is just education: both about the benefits of solar and the affordability of it through our offering. We aim for customers to pay for our system primarily through savings.
How many local Africans work for you in the field?
We have created over 1,000 jobs in the markets we serve. Almost all of our employees and contractors are local.
What are your plans for the next 3-5 years?
We plan to create the first great pan-African solar brand, known for great service, great value, and great performance.
Where do you get the solar panels you distribute in Africa?
We have a global supply chain to find the best value to our customers.
Do you expect the solar panels you distribute to decrease in cost?
I can’t predict the future of solar prices, but it is important to realize that we provide a complete solution. So it is not just a solar panel, but battery, LED lighting and more. I do expect costs to continue to decrease with the growth of the solar and storage industries.
Are you looking into energy storage options like battery systems to eventually combine with your solar panel systems?
Since the majority of our customers live off of the electric grid, we include storage with every system we sell.
Have you calculated an ROI for your customers who switch from using kerosene lamps and having to continually pay for kerosene to solar panels and LEDs?
The ROI varies widely, but one number we come back to is that our customers typically get 50 times more light per dollar spent than they did with kerosene.
What was the genesis of Off The Grid?
Off Grid Electric was founded in 2012 when Josh Pierce, Erica Mackey and I moved to Tanzania with a goal of starting a new energy company that used solar to solve the problem of the 1.3 billion people living “off the grid.” We quickly learned that the key is reducing customer risk and delivering a very high quality service at an affordable price.