Off.Grid:Electric is powering homes in Tanzania using a model more reminiscent of mobile phones than power companies.

Rather than relying on selling gadgets, which can become outdated and which typically cost more than the average rural Tanzanian could afford, Off.Grid:Electric sells prepaid solar-powered electric services to people in rural areas.

It could cost between $600 and $800 for someone to connect to the national grid, the most basic OGE plan costs $6 to install and $1.25 a week for two lights and a cell-phone charger.

Prices increase based on the type of service a user wants (television, fridges, cookstoves, etc.).

Because the user never owns any of the products, costs stay low--and the user doesn’t need to become an expert in solar repair.

Within 10 years, OGE hopes to power 10 million off-grid African homes.

For now they’re mostly based in Arusha, Tanzania.

But with the combination of low-interest repayable grants, angel-investor capital, and insatiable demand, they’re poised to see a mobile-phone-like trajectory.

For cofounder Erica Mackey, the most exciting part isn’t ideation; it’s last-mile delivery. "I’ve never felt more productive in my life than the times where I have been building teams and the structure for great ideas here."

"The most exciting thing about this space is that people need this," she says. "It’s a solution."

"There was no way we’d be able to iterate our model and technology if we weren’t living amongst our customers and visiting their homes."

2013-04-03

How To Power 10 Million Off-Grid African Homes In 10 Years

Taking cues from the pay-as-you-go mobile phone market, Erica Mackey and Off.Grid:Electric are working to deliver clean, affordable energy to the world’s rural poor.

In the startup world, few words are wiser than "don’t let the perfect be the enemy of the good."

The sentiment echoes General George S. Patton’s famous words--"a good plan implemented today is better than a perfect plan implemented tomorrow"--and functions as a rallying cry for follow-through. But just as important is recognizing when your good plan isn’t good enough and finding the resolve to change it on the fly.

That’s what Erica Mackey and Off.Grid:Electric learned in their effort to deliver clean energy to the world’s rural poor. With a cue from the mobile phone industry, the Tanzania-based company has transformed yesterday’s good plan into tomorrow’s best hope for clean, affordable energy in off-grid Africa--and they’re implementing it today.

"The poorest people people pay the most money for the dirtiest power," says Mackey, the 30-year-old COO. "And these people are technically the most risk averse, because anything they lose is a huge hit to them. What we do is centralize that risk. And that allows us to serve the people the national grid doesn’t find profitable."

Here’s how it works: rather than relying on selling gadgets, which can become outdated and which typically cost more than the average rural Tanzanian could afford, Off.Grid:Electric sells prepaid solar-powered electric services to people in rural areas, powered from what they call M-Power Hubs. These are people who would otherwise be using kerosene lamps for lighting and back-up generators to charge cell phones. Whereas it could cost between $600 and $800 for someone to connect to the national grid, the most basic OGE plan costs $6 to install and $1.25 a week for two lights and a cell-phone charger. Prices increase based on the type of service a user wants (television, additional lighting, radio, etc.), but because the user never owns any of the products, costs stay low--and the user doesn’t need to become an expert in solar repair.

Incorporated in 2011, Off.Grid:Electric is the brainchild of founders Xavier Helgelsen (who previously created Better World Books), Joshua Pierce, and Mackey. Mackey met Helgelsen at Oxford’s Saïd Business School, where each was attending on a Skoll Fellowship. Helgelsen and Pierce met through their wives. Together the three founders developed an award-winning project to retrofit Tanzania’s off-grid cell phone towers as solar charging hubs and then disperse the energy to nearby communities.

But there was a problem: most towers were too far from residences, and running distribution lines would be cost prohibitive. Furthermore, using towers as hubs ignores one of solar’s greatest assets: its portability. With the help of technology company Fosera, OGE developed systems they could deploy directly inside users’ homes. And by studying how mobile phone usage spread in emerging markets in East Africa and Bangladesh, they honed their business plan.

"Our biggest role models have been mobile phone companies," says Mackey. "As soon as you don’t have to chase people for their bills or people don’t have to commit to paying for something unless they have the money in their pocket, then you know no other thing’s gonna work here. The drivers for our model are very similar, where it’s an average revenue per user, so because we’re a service-based company, what our users pay us per month is what drives our profits. By [working with] that end customer for their lifetime, we can build a trusting relationship with a ton of customers on a daily basis. Every time we came to a problem, we looked at it and saw the mobile industry had already solved it."

Within 10 years, OGE hopes to power 10 million off-grid African homes. For now they’re mostly based in Arusha, Tanzania, but with the combination of low-interest repayable grants, angel-investor capital, and insatiable demand, they’re poised to see a mobile-phone-like trajectory. (Between 2000 and 2011, the number of mobile phones in Africa skyrocketed from 9 million to 650 million.)

For Mackey, who was born in California but split time in high school between suburban Orange County and South Africa (where her father lives), the most exciting part isn’t ideation; it’s last-mile delivery. "I’ve never felt more productive in my life than the times where I have been building teams and the structure for great ideas here."

In 2004, after finishing school at UCLA, she headed to Tanzania with the nonprofit Support for International Change to deliver health services with a focus on AIDS education. "That was definitely the spark," she says, "trying to solve a very clear and definable problem in adverse conditions." In 2006 she returned to Tanzania--equipped with fluency in Swahili--as SIC’s executive director. Over the next four years, she increased revenue by 200%, and even during her year at Oxford, she kept a foot on the ground in Tanzania.

"There’s definitely an art to figuring out how to run a Western style company in an African context," she says. To wit, before our scheduled Skype call, a ship anchor dragged across underwater cable, wiping out Internet connectivity for a few days--on the entire East African seaboard. "Because things like this happen and you have to roll with the punches, but then you have to try 100% to avoid lowering your standards or getting lazy, because there’s always an excuse."

"But the most exciting thing about this space is that people need this," she says. "It’s a solution. We don’t have to market. The demand is so insatiable that there can be a lot of big winners. East Africa is a pretty exciting place for startups at the moment. There are quite a few tech companies and social entrepreneurs. So it’s nice to be close to that, but still feel like we can walk out our front doors and we’re in our customers’ homes. And there was no way we’d be able to iterate our model and technology if we weren’t living amongst our customers and visiting their homes."

And thanks to Mackey and Off.Grid:Electric, the lights in those homes will shine brightly for years to come.

All photos by Esther Havens, courtesy of Off.Grid:Electric.

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4 Comments

  • john

    OGE has become un umbrella to the most of people livin with no light. Now it lights the Africa,big up to the founder

  • Direction1212

    where  and How to contribute some  solar power units to Africa? i have these product

  • Adesiderato

    No doubt, OGE is going to change the course of access to sustainable energy in Tanzania and beyond! I had the good fortune of spending 1 day in the field with this amazing team and witness not only the difference they are making in their customer's lives but also the employment opportunities they are extending to motivated entrepreneurs. I wrote about it here: http://blog.sunfunder.com/post...