08.03.2017, Interview with E.ON Off Grid Solutions GmbH, Business Member of Sun-Connect News Company Database
"The main challenges for renewables in developing countries are missing governmental regulations and incentive schemes" - Daniel Becker, Managing Director
E.ON Off Grid Solutions was founded as the first start-up within E.ON’s start-up program :agile in July 2013. Under the brand name Rafiki Power (Swahili – Friendly Power), the company operates as an energy & access platform in East Africa with offices in Düsseldorf and Arusha, Tanzania.
SC News: Do you remember the first customer your company has served? Who and where was it? What did he/she buy?
Daniel: Of course, after spending two weeks on site in rural Tanzania I remember him very well. On December 4th 2014, Athumani Abdala becomes the first end customer to receive reliable power 24/7 365 days per year (making him the only one in a radius of 80km).
SC News: What is your experience: which product, beyond lighting, customers request the most? And which other appliances for Solar-Home-Systems you think should be provided in future?
Daniel: First of all, we are not a Solar-Home-System company but a Mini-Grid company. We do believe in the need of AC power and the flexibility a grid provides in larger villages if rural areas want to develop economically. Over the past three years we have learned – through continuously run product surveys, data assessment and regularly calls with our customer base – that a high demand for quality products exist. On the consumer electronics side, appliances that are most in demand are TVs, radios, clippers and sub-woofers. In addition to these standard products, we have already sold a chicken incubator as well as a washing machine which local entrepreneurs used to create their own business.
On the productive-use side, we actively promote printers, fridges, freezers and wood-workshop tools as this allows villagers to open up their own small businesses. Additionally, we had requests for water pumps, grinders and mills which we are currently implementing in pilots.
SC News: The market in developing countries is often influenced by local corruption, insecure governmental policies, and bureaucratic hurdles for customs clearance. Which obstacle is/was for your business the most challenging one - and why?
Daniel: We had and still have to face a myriad of obstacles. While sometimes frustrating they have taught us a lot about doing business in general and specifically in Tanzania and enabled us to grow as an organization. We have overcome most of them but the biggest one still is policy and regulation. Central open questions are tariff setting, grid standards, subsidies, what happens when the grid arrives, permit requirements and the like. These uncertainties drive costs but most importantly create uncertainties that make attracting financing and thus a scale up very difficult. We are currently working closely with the government and donors to clarify these open questions and hope that Tanzania and other African countries realize the need and adjust their policies.
SC News: Right now we see a huge focus on pay-as-you-go sale in the off-grid sector. How do you see them further development of this type of business?
Daniel: In our opinion, pay-as-you-go services especially mobile money payment will increase significantly throughout Africa. They solve two basic problems when providing services in rural areas in Africa: cash handling and lack of financing. For people living in rural areas that do not have a bank account and a low in-frequent income but own a cell phone and can thus use mobile money, pay-as-you-go services allow businesses to provide services to them more efficiently and collect valuable data. Based on the data, companies like ours can offer improved or new services that are pre-financed and thus accessible to even more customers. As customers use pay-as-you-go services they create a profile of their reliability and income allowing companies in turn to offer more services. Thus pay-as-you-go solutions will thrive because they create a virtuous cycle.
SC News: In your view, what are the main challenges in making renewables an affordable easy-to-access energy resource?
Daniel: The main challenges for renewables in developing countries are missing governmental regulations and incentive schemes. As renewable projects carry high upfront costs and minimal variable costs they need a feed-in guarantee, strong PPA or direct subsidies. Renewable mini-grids do not only provide renewable energy but also build a long lasting “infrastructure” to service customers. These investments need regulatory security and in many cases subsidies.
SC News: What was a mistake in the past from which you learned a lot for the future development?
Daniel: One mistake in the past was that we thought energy development will happen by itself. What we realized instead is that we cannot just build mini-grids and expect our local customers to use it to their maximum benefit. Rural customers need to be educated, trained and provided with the means (e.g. product sales, financing) that enable them to use our electricity to develop themselves and improve their lives. This is more than a single private business can offer thus we are actively developing NGO and business partnerships to provide these services. For this purpose, we have partnered up with Energy4Impact (www.energy4impact.org) to unleash the potential of local entrepreneurs across our villages. Different customer needs and business ideas were screened and analysed. Useful and energy-efficient electrical machines such as circular saws and compressors were identified and offered to the customer. Customers will be trained to develop their own successful business case and to use the proposed machines/tools effectively. For example, we have carried out a ‘Business Plan Competition’ in Kwa Mtoro, awarding the most promising entrepreneur Halima to set up her innovative hair saloon in the Rafiki Power Container. With the beneficial loan she bought a hood-type hairdryer, electric shavers and other appliances to kick-start her business.
Facts and figures
Name of the company:
Headquarters based in:
E.ON Off Grid Solutions GmbH – Rafiki Power
Düsseldorf, Germany / Arusha, Tanzania
Energy & Access Platform
- Offering reliable, clean power via Solar PV & Battery Mini-Grids
- Offering customer trainings
- Offering product sales (electricity consuming consumer goods and productive-use machines)
- Offering micro-finance services to customers