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$100,000 | Tanzania | Stage 1
THE PROBLEM: Three out of four people in Sub-Saharan Africa lack access to electricity. The problem is especially acute in rural areas, where electrification rates are often lower than 5%. In Tanzania, more than 80% of the country’s 43 million people are off the power grid. Those without grid access spend an annual $790 million on imported kerosene for lighting, AA batteries for basic electricity needs, and expensive, often distant charging business to power their cell-phones.
THE SOLUTION: EGG-energy is an innovative private venture that bridges the “last mile” power distribution gap to bring affordable, reliable and clean energy with an award-winning business model. In rural and peri-urban areas, EGG-energy charges small lead acid batteries from the national power grid or its own solar charging stations, and rents them out to individual and institutional customers. Each battery provides power for 3-5 nights.
COST-EFFECTIVENESS: Spending $5 per month for their EGG subscription after electrical wiring of their home has been completed, EGG-energy customers pay 35% less than the average cost of kerosene and public cell phone charging to power a package of 3 lamps, one cell phone charger, and 1 radio.
Electricity still remains an out-of-reach luxury in the vast majority of African households. In Tanzania alone, more than 80% of the country’s 43 million people (7.2 million households) lack access to grid-electricity. Combined, they spend an annual $790 million on lighting and basic electricity needs. In peri-urban and rural areas, 91% of households depend on kerosene for lighting – a source of lighting that is inadequate, dangerous, polluting, and results in serious adverse health effects.
EGG-energy is an award-winning private venture started by MIT engineering and Harvard business students that has been operating in Tanzania since 2009. EGG-energy charges small lead-acid batteries and rents them out to individual and institutional customers, whose homes and business electrical and lighting system EGG technicians install. Each battery can power 3 lamps, 1 cell phone charger, and 1 radio for 3 to 5 nights. Once they are depleted, they can be swapped for freshly charged ones at the EGG central station or partnering depots.
With support from DIV, EGG-energy will test its model of franchising modular solar hubs to local entrepreneurs to charge home batteries and provide battery swapping services within their communities. EGG-energy selects and trains local entrepreneurs interested in expanding their business line by operating a small solar charging station, dimensioned to charge home batteries for 15 customers and 20 cell phones per week. Once the entrepreneur has secured a down payment from 15 customers, EGG-electricians visit the neighborhood to install clients’ home lighting systems. Customers subscribe to the battery charge and swap service for $4.60/month in semester or annual subscriptions.
The pricing scheme allows profit sharing between the end user (35% annual savings on their energy expenditures), local entrepreneurs (6-year average profit of 24%) and EGG-energy (internal rate of return of 27% over six years). During the Stage 1 project, EGG-energy will set up 100 solar charging stations and connect 1,500 households and small business over the next year.
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Last updated: February 18, 2013