Nuru Light: The Off-Grid Lighting Solution

Nuru Light: The Off-Grid Lighting Solution

Rwanda
Organization type: 
for profit
Budget: 
$50,000 - $100,000
Project Summary
Elevator Pitch

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

Nuru Energy seeks to replace expensive and polluting kerosene lamps in Africa by introducing the Nuru Lighting system, the world’s most affordable and efficient off-grid option. Our light is charged by a pedal generator, which provides over 500minutes of light in just 20minutes of gentle pedaling. Our light retails for less than $7, making it 1/2 the cost of the cheapest solar lantern in Africa.

About You
Organization:
Nuru Energy
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Section 1: About You
First Name

Sameer

Last Name

Hajee

Country

, KV

Section 2: About Your Organization
Is your initiative connected to an established organization?

Yes

Organization Name

Nuru Energy

Organization Phone

+250783492342

Organization Address

P.O. 5345 Kigali, Rwanda

Organization Country

, KV

How long has this organization been operating?

1‐5 years

Your idea
Country your work focuses on

, KV

Innovation
What makes your innovation unique?

Our system, which includes the Nuru light and the POWERCycle pedal generator, represents an innovative solution to the crisis of rural lighting. We saw that kerosene is ubiquitously used because it is portable and can be purchased in increments; we designed our product to fit the same criteria. Customers are not required to buy a POWERCycle; instead, customers pay a small fee to a local POWERCycle operator for each recharge. With just the light to purchase at less than $7, and the option to buy in installments, all levels of society can afford the product. The light also has a patent-pending modular design, which allows for customers to buy more than one light and connect them to make a lantern or to continue using them separately. This system allows customers to buy more lights as they accumulate savings.

These two features of our product and approach are completely innovative, and stand in direct contrast to the products and approaches of our competitors. Other companies have solar products that require a substantial upfront investment ($20-100), making them too costly for the rural poor. Solar products also require steady sunshine, which is unrealistic in East Africa; the days are short and there are extended rainy seasons. Our charging mechanism, in contrast, provides power at any time in just 20 minutes of pedaling. Also, solar products have a minutes of charging to minutes of light use ratio of 1:1, while our light has a ratio of 1:525, making it the most efficient system on the market. Furthermore, solar lights are not multipurpose- most are standard desk lamps. Based on feedback from hundreds of Rwandans, we created a light that is durable, bright, and user-friendly; it can be used free standing, hung, wall-mounted, bottle-mounted, strapped around the head or neck, or even connected to another Nuru, to make a stronger light.

Do you have a patent for this idea?

Yes

Impact
Tell us about the social impact of your innovation. Please include both numbers and stories as evidence of this impact

Effect on entrepreneurs

The project empowers local people, mostly women, by using a microfranchise model, in which community members will sell and recharge the lights. Each entrepreneur will be provided with their own POWERCycle generator and an initial set of 100-250 lights to sell to local families. The entrepreneurs will draw an income by charging light owners $0.35 per charge. The result is a profit of over $5 per day. Such an income would launch an entrepreneur out of extreme poverty, giving them four to five times the national average income and allowing them to pay for, among other things, education, health services, and the nutrition of their families.

Effect on customers

•Poverty Alleviation: With Nuru families save 90% over kerosene. For families that earn less than $1 per day, these savings are life-changing, allowing them to spend more on the health, education, and nutrition of their children.
•Health: Nuru will prevent households from breathing in noxious kerosene fumes, dramatically improving their pulmonary health.
•Education: With Nuru, children will no longer be restrained by daylight and can study and do schoolwork at their leisure. The improvement will be most pronounced with female students, who are burdened with a greater number of household responsibilities, such as cooking and collecting firewood, leaving little time to study before dark.
•Income Generation: By employing local people, to sell and recharge the lights, Nuru provides employment to thousands living in poverty.
•Accident Prevention: 25% of Rwandan households reported kerosene related fires in the last year. Nuru will eliminate any risk of fire.
•Improved Lighting: With Nuru, Africans gain access to a light that is bright, multi-functional, and completely mobile.

Effect on the Environment

In East Africa, kerosene remains the only source of light for almost 90% of the population. Each kerosene lamp emits, on average, 0.15 tons of CO2 per year. Nuru has an aggressive expansion strategy, which will include sales of 1.7M lights within 5 years. As our 10-month baselines survey proved, each Nuru Light replaces one kerosene lamp. The result is over 350,000 tons abated within 5 years.

Problem: Describe the primary problem(s) that your innovation is addressing

There is a tremendous need for our light due to the absence of an affordable, safe, and clean lighting for the rural poor without electricity. Most of the rural poor in the developing world use kerosene, including almost 90% of East Africans. Kerosene is:

•Polluting: Worldwide, kerosene is responsible for over 250M tons of CO2 emissions annually.
•Expensive: 1.8B people lack access to electricity entirely, spending 10-40% of income on replacement lighting services. These sources of energy are dirty and inefficient, and on a per-kilowatt basis they cost anywhere from 5-100X more than modern technologies.
•Unhealthy: Kerosene and other fossil fuels produce noxious fumes that can lead to a variety of ailments. 780 million women and children breathing particulate laden kerosene fumes inhale the equivalent smoke from two packs of cigarettes per day (World Bank).
•Dangerous: Kerosene lamps cause countless deaths by burns, fires, and suffocation. In Rwanda, 25% of households reported a fire in the last 12 months.
•Inadequate: The light provided by a kerosene lamp is dim and inefficient. The amount of light from the lamp is only about 1% of what the people in industrialized countries have for the same price and is only 0.2% as strong as a 60W bulb.

Actions: Describe the steps that you are taking to make your innovation a success. Include a description of the business model. What might prevent that success?

Light Sales:
Nuru has an innovative distribution/sales strategy that will allow us to scale at an unprecedented rate. Instead of selling lights directly to the end consumer, which requires large inventories, slow turnover, many sales representatives and high working capital requirements, we sell directly to microfinance institutions (MFIs). The MFI then loans 100-250 lights to each “entrepreneur”. The entrepreneur then sells to the end customers; with the revenue from selling the lights at a roughly $0.44 per light markup, the entrepreneur pays back the loan over 6-8 months.

Light Distribution: NURUMFIENTREPRENEURCUSTOMERS

POWERCycle Sales:
Nuru will rapidly establish recharging stations throughout the countryside by distributing pedal generators to entrepreneurs at no (or minimal) upfront cost. Each POWERCycle will have its own keypad and in order to operate the POWERCycle, the entrepreneur must buy activation codes, which, depending upon the amount purchased, will allow the entrepreneur to recharge a certain number of lights before having to purchase another activation code. The entrepreneur will be able to use mobile-money text messaging to buy credit through his/her phone.

The entrepreneur will pay back Nuru $220 for the POWERCycle, in addition to free marketing materials, through the purchase of activation codes. Entrepreneurs will be charged a higher rate on each activation code purchase and the difference in price will go towards the purchase of the POWERCycle; once Nuru has collected the additional $220 from the entrepreneur, the entrepreneur will then be charged the normal rate for activation codes, which is equal to ~15% of his/her revenue. This distribution strategy allows anybody to become an entrepreneur and minimizes the risk taken by the MFIs, as they only have to loan the lights and not the pedal generator.

POWERCycle Distribution: NURUENTREPRENEURS

The major factor that could prevent the success of the project is (1) inability to distribute through MFIs and (2) underperforming entrepreneurs. We mitigate these factors by working with a number of MFI partners, giving us maximum reach and minimal dependence on any individual MFI. We also have a thorough selection, training, and monitoring process to ensure that our entrepreneurs repay their loans and are productive/motivated.

Results: Describe the expected results of these actions over the next three years. Please address each year separately, if possible

Yr 1:
• Establish 265 new recharging stations
• Provide an income of over $3 per day to 265 entrepreneurs
• Sell 25,000 lights
• Save 25,000 customers 95% on their lighting costs
• Allow 75,000 children to study at night
• Boost productivity by up to 30% for 25,000 households
• Prevent the emission of 1,000 tons of CO2
• Earn $215,000 in revenue
• Expand operations in Rwanda & Kenya
• Introduce the Nuru Cell Phone Charger

Yr 2:
• Establish 1,250 new recharging stations
• Provide an income of over $3 per day to 1,500 entrepreneurs
• Sell 145,000 lights
• Save 170,000 customers 95% on their lighting costs
• Allow 500,000 children to study at night
• Boost productivity by up to 30% for 170,000 households
• Prevent the emission of 12,000 tons of CO2
• Earn $1.7M in revenue
• Expand to Tanzania & Uganda
• Introduce the Nuru Radio and the Nuru POWERPack

Yr 3:
• Establish 2,200 new recharging stations
• Provide an income of over $3 per day to 3,700 entrepreneurs
• Sell 335,000 lights
• Save 500,000 customers 95% on their lighting costs
• Allow 1.5M children to study at night
• Boost productivity by up to 30% for 1.5M households
• Prevent the emission of 45,000 tons of CO2
• Earn $4.4M in revenue
• Expand to Burundi

How many people will your project serve annually?

More than 10,000

What is the average monthly household income in your target community, in US Dollars?

Less than $50

Does your innovation seek to have an impact on public policy?

No

If your innovation seeks to impact public policy, how?

Approximately 150 words left (1200 characters).

Sustainability
What stage is your Social Enterprise in?

Operating for 1‐5 years

Does your organization have a board of directors or an advisory board?

No

Does your organization have a non monetary partnerships with NGOs?

No

Does your organization have a non monetary partnerships with businesses?

No

Does your organization have a non monetary partnerships with government?

No

Please tell us more about how partnerships could be critical to the success of your Social Enterprise

There are two key partnerships that are critical to our success: (1) our partnership with the microfranchise institutions and (2) our relationship with the Nuru entrepreneurs.

(1) Microfranchise Institutions (MFI)- Nuru Energy works with local microfinance institutions to fund our network of Nuru entrepreneurs. We sell our equipment directly to the MFI, who then loans the equipment as in-kind loans to the entrepreneurs. We also work closely with the MFIs to identify and select the entrepreneurs, tapping into their network of clients to be potential entrepreneurs and getting their approval to extend loans to entrepreneurs.

(2) Nuru Entrepreneurs- Nuru Energy works with a network of rural entrepreneurs to sell and recharge Nuru Lights. We will identify and select these entrepreneurs from local cooperatives, then train, finance, and assist them in being lights sellers/rechargers.

Together, the MFIs and entrepreneurs serve as our distribution networks and without either group, we are unable to sell our lights. We therefore seek to create a mutually beneficial environment, where the MFIs get a desirable loan package for potential customers and the entrepreneurs earn a healthy living.

We would like to learn more about how your initiative is financially supported. Please explain your business plan/revenue model

Nuru draws revenue from three different sources:

(1) Equipment Sales: Nuru sells lights through MFIs and POWERCycles directly to entrepreneurs. Nuru is also developing a number of other POWERCycle compatible products, including radios, cell phone chargers, cell phones, portable fans, and ambient lights to be sold through its entrepreneur network. Nuru is also developing a battery (the POWERPack) that charges in 20 minutes on the POWERCycle, detaches, and can portably charge up to 10 cell phones at once. Equipment sales will represent roughly 45% of revenue, though products are sold roughly at cost, so there is minimal profit made.

(2) Recharge Revenue (“Activation Code” Sales): POWERCycle operators (“entrepreneurs”) draw a recurring revenue stream by charging customers to recharge their lights and other POWERCycle compatible products. POWERCycle operators will use a fraction of the revenue in order to buy activation codes, which allow them to operate the pedal generators. The activation code purchases represent only ~15% of the entrepreneurs’ revenue, allowing the entrepreneurs to still earn up to $10 per day profit. These activation code purchases, which are made through scratch codes and/or mobile money transfers, represent 25% of revenue for Nuru.

(3) Carbon Credits: The CDM allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER)
credits, each equivalent to one ton of CO2. These CERs can be traded
and sold, and used by industrialized countries to a meet a part of
their emission reduction targets under the Kyoto Protocol. Nuru has a letter of intent with Carbon Africa Ltd. to register us for carbon credits; Nuru expects to complete registration by July, 2011. Carbon credits will represent roughly 30% of revenue for Nuru.

Annual Recharge Revenue and Carbon Credits will continue to increase with each light in use. The result is exponential growth for the company in those

The Story
What was the defining moment that led you to this innovation?

Sameer Hajee is the Founder of Nuru Energy. Prior to his work at Nuru Energy, Sameer was the Manager of Global Business Development for Freeplay Energy PLC, pioneers in hand-crank technology. Frustrating by their neglect of the base of the pyramid market, Mr. Hajee set out to create an energy solution that was affordable for the poorest 4 billion people, while still meeting their lighting needs. He knew that solar products were simply too expensive, at more than $20 per system, and unreliable, with the need for constant sunlight. In the absence of a viable off-grid alternative, 1.8 billion people would continue to use kerosene because it is portable and can be purchased in increments.

Sameer’s idea was to create and a simple, yet highly functional light, which would be charged by the world’s first commercially available pedal generator; the pedal generator was to also serve as an energy platform for other products, such as cell phones and radios. The simple design of the light would make it affordable for the base of the pyramid market and like kerosene, customers would be able to buy recharges in instalments (on the POWERCycle pedal generator). The pedal generator would also be a breakthrough, as human power is the only source of energy that is 100% reliable; with human power, charges can be done rapidly and dependably.

After making preliminary designs for the Nuru Light and POWERCycle, Sameer entered into the 2008 World Bank Lighting Africa Development Marketplace Competition (under the name “Lights for Life”). With $200,000 US in seed-funding from the World Bank, he assembled a team (including the current COO for East Africa - Julio De Souza) to design both the product and the delivery model in a way that would make the system affordable and accessible to the poorest of the poor.

Tell us about the person—the social innovator—behind this idea.

Sameer Hajee founded Nuru Energy in 2008. Prior to Nuru Energy, Sameer was the Global Business Development manager at Freeplay Energy plc, the developers of the world’s first hand-crank radio and flashlight. At Freeplay, Sameer created the international aid and development sales team, which in 2006 and 2007 generated $6 million US in revenue. While at Freeplay, he co-created and co-managed a Development Marketplace project that saw the creation of 50 rural energy enterprises in Rwanda. In 2005, Sameer launched and managed the Growing Sustainable Business (GSB) initiative at UNDP in Kenya, where he helped domestic and multinational companies, such as SC Johnson, Tetra Pak and Microsoft, to develop and implement pro-poor business models in Kenya. As a leading authority on rural energy provision through micro-enterprise, Sameer was invited to speak on the development impacts of BoP business models at the Business with Four Billion conference at the University of Michigan in 2007. In 2007, Sameer was also invited to address the Cornell Base of the Pyramid Learning Lab on rural lighting issues and solutions. Sameer has been recently asked to moderate a panel on Strategic Growth of Social Enterprise at the upcoming NetImpact Europe conference at IESE Business School.

Prior to his work in BoP markets, Sameer worked as a microprocessor design engineer in Silicon Valley, California and as a telecom engineer for Afghanistan’s first mobile phone network provider, Roshan, in Kabul. Sameer has a bachelors degree in Electrical Engineering from McMaster University in Canada and a MBA from INSEAD, one of the world’s leading business schools. He also studied at the Wharton School in the US through the INSEAD-Wharton Alliance. Sameer is a Canadian national with native roots in Kenya.

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