Photo Credit: C. Schubert, via Flickr
Companies working to bring solar to developing countries need to improve their service delivery if they want to attain disruptive levels of deployment.
Beyond-the-grid enterprises are raising more and more money, but moving from social impact to real venture capital investment will require them to step up their game. That means providing seamless service levels to some of the most price-sensitive, difficult-to-reach customers on earth -- akin to what people in developed countries would expect. It means bringing Apple-level service delivery to those who don’t even have working toilets.
I believe our industry can achieve this. But we need to focus on what has driven success in consumer electronics: value, quality, access, seamless use and cheap financing.
Beyond-the-grid technologies like solar and LEDs face the same lofty expectations as any consumer electronic product. We need to meet those expectations.
The biggest hurdle is financing. Bringing a new product to market at the right price in a developing economy is daunting. Advances such as pay-as-you-go (PAYG) financing are an imperative for any manufacturer and service provider.
Still, within PAYG technologies, there are challenges like breakdowns in sending and receiving SMS payments, customers forgetting how to pay, and multi-step processes that can be challenging for some customers. Developing payment gateways that are reliable, easy to use and product-agnostic will provide higher-quality user experiences.
The user experience needs to be consistent. A new energy customer develops a taste for more sophisticated and versatile uses almost immediately. Customers want products that can handle complex loads to power televisions, motors, radios, razors and coolers. They require systems that can handle these new loads, but are free of expensive service requirements.
"People need lights and mobile-phone charging, but what they want are televisions, radios and fridges," said Justin Guay, who leads the Sierra Club's international energy access program. "The space is already posting incredible growth rates fulfilling needs -- imagine when they fulfill what people want."
In order to build these services, energy providers must know what their customers want. Some startups, including BBOXX, have built product performance feedback systems that access individual customer details in a database. This allows the company to understand the energy usage, financing history and repayment discipline of each customer -- helping them better serve customers and model new markets.
This type of basic data analysis allows companies to build new revenue models based on consumer credit and product insights. It also shows that leading startups are worthy of venture investment.
“The solar-utility model with long-term recurring revenues can build bigger, more valuable businesses than distributing lights for cash,” according to Sandhya Hegde of Khosla Impact.
"The more information they have on customers, the better they can take away barriers to universal adoption: access to credit, length of warranty, response time for service, simplicity of usage. It’s exciting for venture investors because it’s exciting for the end customers," said Hegde.
The "energy-as-a-service" model blends all of these elements together. Under this model, the customer pays for performance and avoids the high upfront cost of buying a solar system. Off-Grid Electric, which recently brought in millions of dollars from SolarCity, has used this model in Tanzania to build customer loyalty and retention. It also helps Off-Grid Electric provide new system accessories and service offerings down the road -- another reason why venture investors have been so interested in the firm.
Those are the elements that will build successful companies in the beyond-the-grid market: seamless PAYG financing, data analysis of behavior, and energy service models that allow customers to avoid the upfront cost of energy systems.
The companies that focus on high-quality customer experiences -- not just basic energy access -- will be the most competitively placed to serve emerging markets.
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Daniel Tomlinson is an access-to-energy entrepreneur and 2012 Echoing Green Fellow. In 2009 he co-founded Frontier Markets, a distribution company whose aim is to build scalable clean energy access to last-mile markets in India.