Solar Lantern Rental System

Solar Lantern Rental System

Laos
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.

Sunlabob is a Lao commercial company, set up in 2000 and licensed in 2001, which operates as a profitable, full-service renewable energy provider selling hardware and providing commercially-viable energy services for remote areas where the public electricity grid does not yet reach. Our headquarters and base are in Vientiane, the capital of the Lao People's Democratic Republic.

About You
Organization:
Sunlabob Renewable Energy Ltd
Section 1: About You
First Name

Ann

Last Name

Moey

Website
Country

, VT

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

Yes

Organization Name

Sunlabob Renewable Energy Ltd

Organization Phone

+856 21 313 874

Organization Address

Watnak Village, PO Box 9077, Vientiane

Organization Country

, VT

How long has this organization been operating?

More than 5 years

Your idea
Country your work focuses on

, VT

Innovation
What makes your innovation unique?

Solar lanterns have been widely propagated as a solution for lighting in remote villages away from the grid. Standard solar lanterns however, have shown to fail much earlier than expected. One reason is because low quality components are often used to reduce costs of manufacturing to
make the lanterns more affordable. Another is that batteries are often irregularly charged, or households engage in "hotwiring" to use the batteries for operating other equipment, resulting in early battery failure. The result is that solar lanterns have not made a broad breakthrough in poor rural areas, and that kerosene still rules the off-grid lighting market.

Sunlabob has developed a solution that removes the problem of owning poor quality equipment from the user, by enabling them to purchase a service through the SLRS instead. The SLRS is made up of a solar charging station and the battery lantern units. Households pay a fee for a fully charged solar lantern which they can take home to use for lighting. When the battery of the lantern has been depleted, the household will exchange the depleted lantern with a fully charged one, again for a fee. A deposit is paid by the household to deter damage or theft of the lantern unit.

For the households, the recharging fee is a regular, small expense similar to buying kerosene at the village shop. Even the act of going to the recharging station to “buy light”, mimics the act of buying kerosene at the village shop. With these rechargeable solar lanterns however, the households get much better quality of light and a much safer appliance compared with using a kerosene lamp.

Do you have a patent for this idea?

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

Sunlabob has spent over a year conceptualising the SLRS, and carrying out product R&D on the components. In addition, 2 pilot projects have been conducted in the following locations in Laos:

• Ban Sor, a village within Vientiane Province which has no electricity and poor access to kerosene. Ban Sor is made up of 334 families and is a melting pot for surrounding ethnic groups.

• Ban Thaheua; a village in Bolikham District, Bolikhamxay Province. Ban Tha Hua has 49 households and a population of 234. Bolikham is targeted as one of the 47 poorest districts in Laos (NGPES). The village does not have access to grid electricity.

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

A large number of villages in Lao PDR are not hooked up to the electrical grid and in the past, their only source of electricity were decentralized small systems, i.e. solar, micro hydro, etc. Such systems required high initial investments that were too costly for villagers, so the easy-fix solution was to heavily subsidize the installation of equipment. However, this meant that continued and reliable servicing was indispensable for a development effect to happen.

The Solar Lantern Rental System is a viable system that addresses these problem as it allows villagers to get energy without initial investments. It also challenges the company that rents out the systems to organize the servicing reliably or else lose money on the failing rents.

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?

Sunlabob is taking the following steps to ensure the SLRS is a success:

- raising the capital for high initial investments
- securing reliable follow-up services of high quality
- enhancing and supporting communal organization at the village level to
take care of the required on-the-spot organization
- establishing partnerships with relevant organizations (Donors, NGOs, govt. agencies), private interests (individual households) and commercial interests (Sunlabob) in order to achieve the developmental effect of electricity in remote areas.

Sunlabob has also put in place a training and coaching system that arms participants with the competency to operate the system successfully.

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

The SLRS concept was created in 2006 and the first pilot tests ran through 2007 and 2008. The project has now reached the first phase of implementation, which comprises the installation, operation and close monitoring of 10 to 12 charging stations in Laos, as demonstration projects for introducing them to the larger market. Subsequent to this, two more stages are planned: Phase 2, which will add 50-80 more charging stations, and set milestones and quantifiable results such as turnover of lantern rental, minimal product breakdown for the final phase; and phase 3, the large scale dissemination phase to set up a minimum of 200 operational charging stations.

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 more than 5 years

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

Yes

Does your organization have a non monetary partnerships with NGOs?

Yes

Does your organization have a non monetary partnerships with businesses?

Yes

Does your organization have a non monetary partnerships with government?

Yes

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

As one of the poorest nations in the world, the people of Laos are recipients of international public support. Sunlabob’s franchise model can also be structured to include opportunities for Public- Private Partnerships (“PPP”) and micro-financing.

In a PPP arrangement, investments from the private sector can be channeled towards the asset based investments such as the charging stations, either via Sunlabob or even directly to the village entrepreneur/local partner if either has the capacity. Public grants can be structured into revolving funds or a trust fund for purchasing the first batch of lantern units for launching the village entrepreneurs. This Public Private Partnership provides the maximum benefit to various stakeholders while maintaining a sustainable model for providing lighting to poor households in remote rural villages.

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

For Sunlabob, the company will receive US$780 every year to offset the initial cost of installing the solar charging station, estimated around US$2,702. While the simple breakeven is less than 3.5 years, Sunlabob expects to finance the capital costs from loans. Interest payments and administrative costs are calculated as ca US$478 per annum, giving the project a 13% IRR over 15 years. Details of Sunlabob’s expected returns from 1 charging station is provided as Annex 3. The assumptions for IRR calculation in this instance are fairly simplistic and assumes 100% financing for the charging station. The actual situation will be dependent on whether and to what extent this financing is available.

The above business model is a base case scenario of how the SLRS can be implemented by Sunlabob in a standard commercial manner. However, it is realistic to also assume it would be challenging for a Franchisee to come up with up-front capital of US$3,342 to purchase the 40 lantern units.

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

I lived for several years in very remote villages in the north of Laos working on a small rural development project. I discovered that there is both a high potential demand for electric lighting with real impact on improving daily village life, and a chance for business in renewable energy technology. The challenge was to figure out how to fit commercial operations with the diverse social structures in the villages. It is hard learning, but fascinating. Laos is a Marxist-Leninist state and a LDC intending to build a market economy on the Vietnamese model. Laos needs to catch up in just about everything for supporting business development. It fascinates me to work with Lao authorities on how to arrange for business development in these difficult conditions.

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

Andy Schroeter, director of Sunlabob Renewable Energy Ltd, is a successful German entrepreneur, who has 25 years of experience in renewable energy, infrastructure and operational logistics. During his 18 years of experience as company designer and manager, he implemented numerous visions of technical and design concepts that many never thought possible.

His 9 years of work in Laos with Sunlabob have made a significant impact on rural and countrywide infrastructure development. Besides, his efforts have provided commercially viable and affordable energy services to remote off-grid areas. The implementation of Public-Private Partnership programmes – in Schroeter’s opinion the only possible strategy for sustainable development – has lifted the enterprise to become the only internationally accredited and awarded Lao company. Thanks to their highly innovative solutions, Schroeter’s projects in the field of renewable energy have received recognition by numerous international awards, including the World Bank’s Development Marketplace and the German Solar Award in 2005, the BBC World Challenge in 2006, the Ashden Award in 2007, the World Bank’s Lighting Africa Award and the UNEP Sasakawa Prize in 2008.

Andy Schroeter is a professional in project and company design, management, technical design as well as practical implementation of renewable energy concepts, financial management and rural development.

How did you first hear about Changemakers?

Web Search (e.g., Google or Yahoo)

If through another source, please provide the information