EGG-energy: Building the grid from the ground up in rural Tanzania

EGG-energy: Building the grid from the ground up in rural Tanzania

Tanzania
Organization type: 
for profit
Budget: 
$100,000 - $250,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

EGG-energy wants to make clean and safe energy services affordable and accessible to everyone. In the developing world where access to modern forms of energy is extremely costly for lack of reliable infrastructures, we are building a virtual and sustainable grid by using existing distribution mechanisms--feet, bicycles, wheelbarrows, motorbikes, buses, etc.--to transport electricity.

We are developing an electricity infrastructure that benefits and involves the entire community it serves, from the end-user to the new power distributors to the owners of the charging station.

About Project

Problem: What problem is this project trying to address?

Over 500 million people in Africa lack electricity services that could enable them to better study, receive high quality health care, or do business. As an example, a study by the IFC initiative Lighting Africa discovered that three-fourths of small business owners in Tanzania rank lack of electricity access as the greatest constraint on their business. This shortfall results in reliance on unsafe and polluting alternatives such as kerosene and disposable batteries. These inferior options are also expensive: An average household spends $125/year on lighting, radio usage, and mobile phone charging (data from EGG-energy surveys, supported by UNEP & IFC studies). By developing a flexible service that provides a channel through which technology enhancements are made available to the communities we serve while taking the drawbacks of costly technological lock-in away from them, we are able to best serve the needs that they express relative to energy services supply. By creating a network that permeates the local social and entrepreneurial tissues, we stay in tune with their aspirations and are best able to search for and develop the solutions that will positively impact their lives.

Solution: What is the proposed solution? Please be specific!

EGG-energy enables its customers to make affordable investments in an electricity infrastructure: they can immediately improve their quality of life while building the grid from the ground up. Countries that have achieved a wide penetration of grid services have typically required a massive infusion of capital and effort from the top down. What is innovative about our business plan is that it seeks to build an electricity distribution network by starting with households and small businesses. EGG-energy envisions a smart grid for Tanzania that is powered by a variety of distributed and central sources, and believes that we are laying the foundation for that. Several other companies and charity organizations are trying to address the need for lighting, radio, and mobile phone charging. For a full household system, EGG-energy is more affordable than most other options. Most electricity businesses for this market provide products, such as solar lanterns, that are far from fulfilling all the needs that the customers have and does little to build lasting infrastructure, two goals that EGG-energy has decided to work towards.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Rather than sell a product, EGG-energy sells a service. Currently we deliver the ability to power lights, mobile phones, and radios, and are working at providing other services such as the ability to watch television. To do so, we send our electricians to our customer’s home or business to install a full electrical system, including high-efficiency LED light bulbs, wiring, and switches. Our subscription entitles the customer to swap a depleted battery for a fully charged one at our charging stations, or third-party operated distribution centers. Our customers save money while gaining access to cleaner and safer energy services that displace costly, polluting and unhealthy kerosene.
About You
Organization:
EGG-energy
About You
First Name

Jamie

Last Name

Yang

About Your Organization
Organization Name

EGG-energy

Organization Country

, DS

Country where this project is creating social impact

, DS

How long has your organization been operating?

1‐5 years

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Innovation
What stage is your project in?

Operating for 1‐5 years

Share the story of the founder and what inspired the founder to start this project

As I was completing my graduate degree, I was looking to use my skills and experience to have a more immediate impact. I was drawn by work being done at MIT towards designing products with applications in the developing world. I met another MIT engineer with a background in energy, and we decided to find a way to build a for-profit company that provides energy in the developing world. What drove us to start EGG-energy was the growing realization of opportunity: The more we learned about electricity in Africa, the clearer we could see how expensive it is to be poor.

The inspiration for EGG-energy’s battery swapping business came from a health clinic in Uganda run by one of my friends. The clinic was only 100 meters from a transmission line, but had been unable to raise the funding to install the needed transformer. They were also interested in providing power to the nearby village. To me, the situation was ridiculous: Everyone wanted power and was willing to pay for it, but no one had it. Instead everyone was overpaying for inferior services. I want to make things more sensible, more fair.

I believe the best way to bring social change is to build companies that generate real value. For a variety of reasons I’m in a fortunate situation in which moving to Tanzania to start this company is a great opportunity. I want to demonstrate that companies such as EGG-energy are viable business opportunities.

Social Impact
Please describe how your project has been successful and how that success is measured

EGG-energy has sold more than 600 subscriptions (including renewals) to more than 350 households and small businesses, impacting over 1400 lives. We are a long way from our goal of 1 million households in Tanzania alone, but believe it is very reachable.

We have worked with ENEA Consulting to develop a methodology to monitor our economic (financial & operational performance), social (customer & community benefits, employment), and environmental (fossil fuel avoidance & waste management) metrics, showing that our service
- created 8 local jobs in less than 18 months of pilot operation
- provides higher quality lighting at half the cost and one tenth of the life-cycle environmental impacts of traditional alternatives (esp. CO2 and other pollutant emissions), resulting in higher quality of life (measures include: sense of security, savings opportunity, ease of performing activities after sunset)
- is versatile and can be used to provide more than one type of energy service
- provides a platform for the deployment of renewable and distributed sources of energy.

How many people have been impacted by your project?

1,001- 10,000

How many people could be impacted by your project in the next three years?

More than 10,000

How will your project evolve over the next three years?

When we close our current funding round, we will execute our plan to open 6 new sites in the following year. This will allow us to build a solid foundation of management capacity, formal operational procedures, information management, and monitoring systems as well as test new markets and our ability to scale.

In five years, we expect to have more than 130 sites and 90,000 customers, to have opened franchised stations, and to have started to expand within the East African Community. We are also currently working on several initiatives that will help us expand our customer base. For example, we are testing solar-powered charging stations to get closer to our customers. If these prove to be viable, they could be used extensively by EGG.

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

They key challenge in scaling a business like ours is the ability to find good quality employees. We have established procedures for hiring such as interviewing and conducting background checks. We are exploring options for generating a reliable pipeline of employees.

In addition, we face the risks of business model imitation, theft, corruption, exchange rate & commodity price fluctuations, lack of good market research, and general poor infrastructure.

Tell us about your partnerships

EGG-energy has developed a variety of partnerships that will help us achieve our goals.

We are working with Schneider Electric (France), BBOXX (UK/Rwanda), SolarAid (UK/Tanzania) and Solar Nexus to obtain and develop products that meet our customers' needs. We are supported by ENEA Consulting to develop and implement a robust monitoring framework of our performance and impact.

We are developing a partnership with a mobile phone network operator to improve the reach of our marketing efforts in exchange for our help in driving usage of their network and mobile money system, and benefit from the support of the Segal Family Foundation to identify and work with local grassroot organizations whom our service could be helpful to.

EGG has received the support and approval of several government officials, and has a good relationship with the Rural Energy Agency. We are further interacting with Technoserve regarding human capacity building.

Finally, EGG is in the process of developing partnerships with financial organizations like savings and credit cooperatives and microfinance institutions to provide end-user and franchisee financing.

Explain your selections

--We have received funding a variety of business plan competitions and fellowships from both universities and non-profit organizations.
--Invested Development invested in EGG-energy with convertible debt.
--EGG-energy has received donations from individuals and foundations.
-- Several volunteers have contributed their talent and expertise to EGG-energy.
--Our customers provide a revenue stream.

How do you plan to strengthen your project in the next three years?

We plan to expand rapidly and achieve profitability in three years.

Ongoing efforts to support this expansion include working at developing partnerships with technology suppliers, Tanzanian MFIs and community representatives (such as village committees) to identify their needs and how we can best address them, creating an IT infrastructure to facilitate daily operations, and developing robust operating and training processes.

We are also working on the development of a franchise model that will allow local investors and community organizations to invest in EGG-energy charging stations in their area, as well as increase solar power generation in Tanzania.

In the next three years we are building the core of the business, including the IT system, senior management capacity, boards and reporting systems. Finally, we are continually thinking of new partnerships, products, and systems and expect that some of them--such as solar-based charging stations--will be implemented on a broader scale in the next three years.

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

Lack of skills/training

SECONDARY

Lack of efficiency

TERTIARY

Lack of visibility and investment

Please describe how your innovation specifically tackles the barriers listed above.

As stated above, EGG-energy seeks to utilize existing distribution channels to deliver electricity. In doing so, we are bringing appropriate technologies and systems to make these channels more efficient.

We are providing training in electrical equipment use and installation, computer usage, and record-keeping and reporting to our employees. We are growing revenue streams for businesses in other parts of the supply chain, including distributors, transportation providers, and financial service providers.

We are also hard at work inventing means to increase our reach while reducing our capital requirements (e.g. franchising) and entering synergetic partnerships to increase our marketing capability and technical capacity to deliver cost-effective solutions to our target market.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

Grown geographic reach: Multi-country

SECONDARY

Enhanced existing impact through addition of complementary services

TERTIARY

Repurposed your model for other sectors/development needs

Please describe which of your growth activities are current or planned for the immediate future.

We chose Tanzania with an eye on the rest of the East Africa Community. Over the next three years we are expanding entirely within Tanzania. We will then be looking into the viability of our business in Kenya, Uganda, Rwanda, and Burundi.

In addition to the products we are working on with our product partners, we are figuring out how to provide additional services to our customers. Highest in demand is a service to power a television. We have run preliminary tests of this and aim to be able to serve this market by the end of the year.

With our battery subscription service, we are in essence building an efficient, modern supply channel for 4kg objects. We could move many other goods or services through these supply channels.

Do you collaborate with any of the following: (Check all that apply)

Government, Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

While our business model is as simple as we could design it, we could not execute it without collaboration with a variety of organizations.

Experiences shared by both non-profits and for-profit organizations provided valuable insight into operating in Tanzania.

Because so few global companies design products specifically for Tanzania, our collaborations with technology providers have been invaluable.

Our strong ties to MIT and Harvard have given us access to experts in a variety of relevant fields and connected us to a great network.