As various initiatives try to bring electricity to the globe’s most remote places (by way of solar energy), profitability looks to be blocking the light they bring.
ISTANBUL, Turkey — Salinee Tavaranan has a quite determined face when she talks about solar energy and inclusive business. Nothing surprising, though—the entrepreneurial Thai woman is committed to both. She runs a local business installing solar panels in the off-grid villages of a mountainous area near the Myanmar-Thailand border. It’s one of the many remote rural places, still untouched by electricity, that compose “the last mile.”
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SunSawang, her company, used to be a nongovernmental organization that aimed to implement and repair solar systems the Thai government bought in 2004 for the remote countryside.
But when the government stopped providing solar panels, Tavaranan and her team decided to buy them themselves and handle their installation and maintenance. “We realized that if we’d keep doing this for free, we would not be able to do that forever,” Tavaranan says. And so they transformed SunSawang into a business.
SunSawang now offers individual solutions to off-grid households. It trains villagers to become technicians so they can install and repair the systems locally. “This service [maintenance] is the missing part in … similar projects,” Tavaranan says.
Indeed, neither the Thai government nor NGOs, which since 2004 had helped SunSawang install the solar panels, planned to do any upkeep on the precious equipment. The technician’s role is pivotal. Because the rainy season lasts for five months and cuts off access to those villages lost in the mountains, the locals themselves must complete all maintenance and repairs. When customers purchase the solar systems, the cost of installation and maintenance is built in.
This challenge —linking remote areas to electricity—is global. And the innovative solutions and approaches for reaching the most remote customers in these areas are quite diverse.
In the Horn of Africa, for example, Andreas Spiess runs a growing social enterprise called Solarkiosk.
“It’s very simple,” he explains. “There are fantastic technological solutions that are being developed for the needs and specific requirements of the rural off-grid population. And on the other hand, there is this huge market. The problem is, the product never reaches the customer.”
The German entrepreneur spends 180 days a year in Africa. His Solarkiosk is essentially a clean white shed with a roof covered by solar panels. Now settled in the center of several Ethiopian and Kenyan villages, it provides local customers phone and battery chargers, Wi-Fi and refrigerators in which to store medicines. It is its own sustainable marketplace.
Solarkiosk’s business model relies on a franchise system, tapping into local would-be entrepreneurs who can own and operate the kiosks.
The most prosperous kiosk in Ethiopia is held by 23-year-old franchisee Marrashka. Wisely advised by his mother, who used to be a shopkeeper, he has converted his kiosk into a small commercial complex. He has even connected it to a hairdressing salon and a movie theater.
Photo courtesy of Andreas Spiess and Merron Pillart
Marrashka’s resourceful movie theater-hair salon in Ethiopia is connected to a Solarkiosk.
“This young man with no business experience became a thriving entrepreneur,” proudly observes Merron Pillart, director of Solarkiosk’s Ethiopian subsidiary.
While business is going well, Pillart and Spiess both say they are having difficulty finding investments. Since they work mostly with prototypes and cannot forecast their profits over more than a few years, banks scarcely grant them loans.
“We are profitable, but we are not bankable,” Spiess laments. “Solarkiosk’s concept is bankable,” Pillart adds, “but banks don’t look for concepts.”
Although doubts can be cast on their concept of profitability, another green energy company has been “investment profitable,” even if it was for the first time last quarter.
Greenlight Planet is a global company based in Illinois, United States and Mumbai, India. It delivers the Sun King, a yellow, unbreakable, semaphore-like lantern powered by solar energy, to the BoP (base of the economic pyramid) population of three continents. Greenlight Planet’s positive return on investment was almost accidental, as it does not plan to be completely profitable until 2015.
Compared with SunSawang and Solarkiosk, Greenlight Planet is a large company. It employs more than 800 people worldwide, many of whom sell lanterns in villages across 31 different countries. Anjuli Pandit, Greenlight Planet’s director of global communications, offers a colorful portrayal of her local sales forces, saying. “You can buy Sun King from the gossip mother of the village, the respected elder, the teacher, young influencers.”
However, when it comes to reaching the last mile customers—those in remote and rugged areas—Solarkiosk and Greenlight Planet share a similar strategy. They contract with notable local figures, such as elders or business owners, in the targeted area, who then serve as intermediaries between the companies and the end users of their products.
Such an approach to the market is very similar to a nonprofit’s way of proceeding, which arouses the skepticism of Erik Simanis, a researcher at the Center for Sustainable Global Enterprise at Cornell University. By having the same goals, resources and management style as nonprofits, green and inclusive businesses are not likely to be profitable. In such cases, he suggests, “social business is another word for NGO.”
But Pandit insists her company is an actual business. The expectations for Greenlight Planet’s BoP employees are the same as in any global for-profit corporation. “We are an American company, giving to our employee a salary, a career path and performance objectives,” she says.
Greenlight Planet aims to scale up its model, and reach more customers, through its distributors’ network. The company has sealed a partnership with oil giant Total, and as part of its “Total access to solar” strategy, the French company now distributes solar lanterns in many of its African gas stations. Ironic, indeed, but also profitable.
Two happy customers exhibiting the Sun King Solo.
Still, some have their doubts about whether these strategies will work in the long term. “You can’t point to a single profitable solar power license right now,” says Simanis, noting that economies of scale are hard to build in this particular sector because of the cost of solar panel materials. He concedes, however, that some business models are successful, such as that of the company d.light.
One of Greenlight Planet’s main competitors, d.light is an international for-profit enterprise, based in San Francisco, that also produces solar lanterns, which are distributed to Total gas stations. It targets BoP consumers across 40 countries. The two companies are alike in many aspects: They sell similar products, distribute them through local agents in remote areas and yearn to expand as much as possible. Still, as Simanis explains, they remain nonprofit companies and are able to sell mainly because they are subsidized.
This strategic game being played in the BoP market shows that the opportunities in the solar energy field are tremendous. Enough, at least for now, to allow the co-existence of several global firms across various model schemes, as Solarkiosk and SunSawang also have common interests in BoP market. Tavaranan, for example, distributes Greenlight Planet’s Sun King to Thai households.
Even if solar products have not yet proved profitable for entrepreneurs, the creativity they demonstrate, and the way they integrate the BoP population into the process, makes possible a win-win solution for all. After all is said and done, this is not only about the money. In addition to their interest in solar energy, Tavaranan, Pillart and Pandit have one thing in common: They all are former expatriates who came back to their country of origin. The profit they seek is not only pecuniary. They also want to be involved in helping to light the last mile. Or, as Tavaranan says succinctly, they want to “keep doing this.”
