The Greatest Threat to Renewable Energy in Africa Doesn’t Come from an Oil Company

You get solar into rural Africa on the back of motorcycles, not on the back of massive giveaways

You get solar into rural Africa on the back of motorcycles, not on the back of massive giveaways

While most people probably didn’t notice the story, those of us in the off-grid solar community woke up to news Friday morning that sent shockwaves through the industry—and not the good kind of shockwaves.  A Canadian solar company, SkyPower, had just announced plans to give away 2 million solar home systems in Kenya… for free!

This number—enough for nearly 30% of Kenya’s off-grid households—is so huge that it would severely destabilize and possibly even destroy East Africa’s budding off-grid solar industry, setting back the cause of renewable energy for years.  In the worst-case, such a massive giveaway with no plan for servicing the systems could cause Africans to lose faith in solar technology forever, paving the way for dirty energy to make a devastating comeback.

Solar is a growing industry in East Africa.  Private companies have already installed more than 300,000 solar home systems in Kenya alone over the past five years; BBOXX recently installed 1,000 customers in just one county of Kenya last month.  The sector raised $42 million in Jan 2015 alone—an 800% increase in pace compared to the $67 million raised in all of 2014.

Deep in the village: there's a solar panel on that roof

Deep in the village: there’s a solar panel on that roof

And best of all, it’s being done right way: sustainably, for a profit.  Companies like BBOXX, M-Kopa, and others are not just appearing in villages and dumping solar systems into people’s homes.  They’re setting up for the long-term to ensure they are able to service customers’ solar systems as long as those customers are around:

  • Warranty periods are extending. When I started in this space 4 years ago, we offered a 6-month warranty.  Now companies like M-Kopa and Greenlight Planet give 2-year warranties; BBOXX (the company I work for) and Mobisol offer 3-year warranties; Off-Grid Electric just does away with ownership of the systems altogether and guarantees repairs as long as customers are paying.
  • Companies are getting closer to customers. A warranty is great, but to make it work you actually have to have someone on ground to honor it.  BBOXX, for example, ensures that no customer is more than 3 miles from a shop with a trained technician in the areas in which we operate.  This proximity is incredibly important because customers deep in the village don’t usually call to report problems (our internal research indicates that out of customers who’ve had a problem with their solar system, more than 1/3 of them never called to report it).
You don't get much closer to customers than this: BBOXX solar shop in Kyarumba, Kasese District, Uganda

You don’t get much closer to customers than this: BBOXX solar shop in Kyarumba, Kasese District, Uganda

  • Companies are hiring en masse. BBOXX alone employs more than 120 staff across Africa, and supports nearly 300 commission-based sales agents—and we’re only one player in this vast market.  Based on these and similar figures from a few of our competitors, I would estimate that more than 6,000 families across East Africa depend on the off-grid solar industry for their livelihoods—and that number could easily reach 50,000 within the next 3 years.
Some of the people who would be put out of business by Sky Power's massive giveaway

Some of the people who would be put out of business by Sky Power’s massive giveaway

In other words, the current private-sector model for off-grid solar has been proven to work—the only thing lacking is large-scale financing.

One thing that’s been proven NOT to work is giving away solar systems for free.  I’ve travelled all over East Africa, from peaceful Rwanda to war-torn regions of South Sudan, and I can’t tell you how often I’ve heard the words, “some muzungus gave us that solar, but for 6 months now it’s not working.”

In Bentiu, South Sudan I came across solar fridges donated by UNICEF that were sitting in health centers still in their original packaging, or had not been used in months because something as simple as a fuse had blown.  In Kaabong, northern Uganda, the hospital had a world-class solar system installed by the best company in Uganda, but most of the lights didn’t work because the hospital didn’t have a budget for maintenance.  In Katakwi, Uganda, I found a school with a solar-powered computer lab—only the system was not working: the World Bank had donated only enough panels and batteries to power 2 of the lab’s 18 computers, and when the inverter blew, the headmaster did not even have the number of a technician to call.

As a result of stories like these, everywhere you go in East Africa, people are wary of solar.

“Ah yes, but is it one of those fake solars?”

“Ah yes, solar is good, but maintaining it is a problem.”

“Ah yes, you have a warranty, but will you really come—or are you those people who sell and then disappear?”

Does a Canadian solar company know how to service solar systems out here?

How do you maintain solar systems out here?

In fact, the only positive stories I can think of about donated solar systems are the ones we installed ourselves—the donor had contracted a local company with a reputation to maintain to do the work, so the installer (us) had a strong incentive to service the systems.  And indeed, we’ve been back twice in 18 months to perform routine maintenance.

Loaded up to the solar installation site

Loaded up to the solar installation site

IMG-20140820-WA0009

Some people expect that giving away solar systems for free will catalyse the market by acting as “demonstration” systems.  But in my experience the result is the opposite: wherever solar systems had been given away for free, you had to wait at least a year to go back.   Everyone would tell you, “we are waiting for those other muzungus to come back with more free solars.”  And of course by that time, there is no one left in the area to sell and service solar systems: they’d all been driven out of business by the giveaways.  Donating 2 million solar system is the industrial equivalent of 19-year old volunteers hugging African babies on Instagram.

Put it all together and what you have is a potential death blow to the future of solar energy in East Africa.  Anywhere these 2 million systems are distributed, it will be impossible for solar businesses to survive; villagers will tell them, “you are cheating us!  How can you ask for money for solar?  For us, we know solar is given for free by the government!”  Solar companies will close shop and find something else to do.  2-3 years down the road when the original batteries have all stopped working, the “beneficiaries” of this programme will conclude that solar is a “fake” technology—and their politicians will hear about it.  Then when Sky Power or whoever else tries to expand solar in the country, they won’t be able to: politicians will be hearing from their constituents, “We don’t want that fake solar!  Bring us diesel!  Bring us grid!”

And because this particular initiative is on such a huge scale, there won’t be any place safe from its disruptive effects.

There is a better way.  Clearly SkyPower wants to do good in Africa.  Clearly they have the capital to do good in Africa.  The only thing missing is the on-ground expertise and infrastructure to actually implement a rural electrification programme in a sustainable way.

There are companies that have these things.  BBOXXM-KopaOff-Grid ElectricMobisolMany others.

Instead of dropping an atomic bomb of charity on this promising industry, SkyPower could work with us to develop the sector.  Establish a working capital facility to finance solar systems for paying customers—the same initial capital needed to donate 2 million systems could electrify 3x that number of households if customers paid for the service.  Contract existing companies to do the work.  There are many ways to do this.  Hell, feel free to contact me – I am happy to provide ideas!

Just whatever you do, don’t give away these 2 million solar systems for free

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7 responses to this post.

  1. Posted by Ryan Zampardo on August 29, 2015 at 3:42 pm

    Are you guys all reaching out to Sky Power to try to get them to change their mind?

    Reply

    • Well its only been a day, but several solar companies have been writing blog posts criticising the giveaway and encouraging sky power to reconsider their methods. So sharing is encouraged!

      Reply

  2. Posted by Ashok on August 31, 2015 at 11:15 pm

    Pretty interesting stuff, Andrew. Always glad to see a new post. Do you want us to post this particular blog on our social media?

    Reply

  3. Thanks – that would be great! The more people who know about this, the better

    Reply

  4. Andrew; you mind me sharing this?

    Reply

  5. […] growing markets requires social subsidies or product give-aways (see the unfortunate example of Sky Power in Kenya) is damaging to the efforts of real investors who stand on the precipice of demonstrating that […]

    Reply

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