A solar startup sees a market where the lights don’t shine
EcoEnergy is a Pakistani startup that provides solar energy to areas that are not on the national grid, along with helping their customers with basic financing needs.
In a country with around 14-19 per cent off-grid population as per the World Bank’s Electricity Access in Pakistan report of March 2016, this means a maximum market size of approximately 30 million population who can be provided easier access to energy — something that takes only a day to install and costs around $20 a month. And that’s exactly what EcoEnergy does: target people who have been left outside the national grid and want affordable energy options.
And how? They first send the potential customer a team and inquire about his or her energy needs and income among other things to install a system that best matches his requirements and affordability.
There is an option to choose between rent and lease and then pay charges per period through EasyPaisa. Given the remote areas (rural Sindh) they currently operate in, the on-ground team guides customers through the entire process from beginning to end.
At the moment they have two options: a 50 Watt home system and a 100W hub which is popular among small businesses like a shop that charges you to watch TV. Their supplier is the UK-based company, BBoxx.
In 2009, Shazia — a Pakistani American — launched EcoEnergy Finance as a non-profit organisation but as she gained deeper access to the local population, she realised that the answer to the country’s off-grid energy woes actually lies in a market mechanism. “I had worked with National Development Finance Corporation and Grameen Shakti (a project of the Bangladesh-based microfinance giant, Grameen Bank) where they had a non-profit approach but that only limited their reach,” she said.
Through a mutual friend, she met Jeremy — an Australian expert on clean energy solutions, who now has been living in Pakistan for over 10 years and serves as the COO. The two joined forces and so, the journey of EcoEnergy began. To know their market, they first conducted household surveys of over 44,000 households and worked on the kinks of their business model from 2010-17.
Things finally got moving when the company approached investors. “We were looking to raise $1 million but ended up scoring $1.8m instead plus an additional $0.5m from a different source,” says Shazia, adding “that we are currently in talks for another $2m.” The investments have already reaped results as they have gone from 200 pico solar system users to 15,000 in just a year. “More investments mean more inventory and therefore, a bigger customer base,” Shazia says. They have another 5,000 pay-as-you-go users as well.
Their growth-focused approach is also reflected through their acquisition of BrighterLite — a Norwegian company operating in the same industry and market —last year. But Wali clarifies that unlike many startups, they don’t wanna shoot for stars they cannot reasonably hope to keep. “Aggressive growth targets might end up risking our customer base, so we are treading somewhat cautiously,” he explains.
Ironically, it’s the Pakistani who is based out of Washington while the Aussie oversees operations on ground here. But doesn’t the CEO’s absence hampers the company’s efficiency? To Shazia, the answer is a definite no. “All of our operations team is in Pakistan and being the CEO, my job is to set the broader vision for the organisation and raise money,” says she.
And to be fair, there is good reason to believe her. Being in the US gives her access to bigger and better investors — something local startups could only wish for. EcoEnergy’s customer service manager in Karachi, Wali, puts weight behind his chief’s claim. “We are always in touch with each other: the targets are communicated clearly to us plus there are regular meetings so I don’t see any reason why that’d affect our functioning,” he tells Dawn.
To be clear, they do not produce the system themselves and can be thought of as a distribution network with on-ground staff to assist their customers throughout the period the product is in use.
In fact, it’s this customer service that Shazia feels places them a notch above the rest and Wali takes great pride in. “We maintain a continuous relationship with the customer and not dump him after the sale,” the CEO claims.
And how do they ensure it? According to Wali, the company has devised flexible payment plans for low income customers. “If a customer doesn’t have the money to pay for the entire month, we can offer the option to pay for a shorter period and we can unlock the corresponding amount of energy. There are no rigid rules with us,” he says confidently.
Given the sheer geographic spread of their customer base, they had to focus their energies initially on one province, Sind. “We only operate within a 35-km radius of our shops so all our customer base is well within our reach,” notes Wali. Three shops do the trick for now.
Throughout the period the equipment is in use, EcoEnergy tracks the patterns of consumption, giving them access to tonnes of data which Shazia says could be analysed for further business development. “We hope to partner with banks and microfinance institutions to help understand them the market better,” she explains.
That sounds like selling data, no? “Absolutely not, never,” Shazia stresses, clarifying “we have gained considerable expertise over the local needs as well as their affordability and we can use that knowledge — not the data — to advise others.
But that’s in the future. What about now? How do their finances look, considering that they do not operate in a very developed area? “We have a repayment rate of over 85 per cent while our default rate is ust 2pc,” Shazia claims.
The industry they operate in has been seeing an ever increasing number of entrants but Shazia feels they have an edge: a winning customer service team coupled a deep market penetration. They already have plans to expand further both geographically and in terms of their products.
“We hope to install bigger plants and offer an independent power producer solution for those with larger energy requirements,” she says. Well, leaving aside the local private competition, at least EcoEnergy doesn’t have to worry about government adding their market to the national grid anytime soon.
