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PRACTICES IN PROGRESS – SOLshare making strides toward expanding energy access in Bangladesh

SOLshare is a social enterprise based in Dhaka, Bangladesh, that seeks to promote sustainable, affordable energy access for rural households through peer-to-peer solar energy trading platforms and pay-as-you-go energy solutions. SOLshare participated in the 2014 Best Climate Practices Contest and has since then won other awards, including most recently the 2017 Startup Energy Transition Award.

SOLshare has developed and is already commercializing two products: the SOLbox and the SOLcontrol. SOLcontrol retrofits any type of solar home system (SHS) and transforms it into a pay-as-you-go system. The payment is done via mobile phone: a code is sent to the user’s mobile phone which can then be entered into the SOLcontrol. SOLbox is a bidirectional DC meter which enables peer-to-peer electricity trading, remote monitoring, and mobile money payment. With a SOLbox, a household with its own solar home system can share surplus electricity with another household which may or may not have its own solar home system but which also has a SOLbox. The SOLbox thus creates a DC mini-grid, where electricity is generated by and traded among the end users.

When SOLshare participated in our contest in 2014, the company was running a pilot test of the SOLbox. Since then, the company has installed one mini-grid and has sold more than 1500 SOLcontrols, of which it started its own production line earlier this year. We spoke about SOLshare’s progress with Elena-Raluca Dumitrescu, Project Manager at SOLshare’s parent company Microenergy International (MEI). MEI is a research and consulting company that develops strategies to promote fair and sustainable energy access for all. It is behind another project which competed in the Best Climate Practices Contest–and won the award–in 2016: Clean Energy Promotion through Microfinance in Ethiopia. Ms. Dumitrescu gave us updates on both of these projects, and explained MEI’s role in promoting them.

 

When SOL Share participated in the Best Climate Practices Contest in 2014, you were implementing a pilot project. What lessons did you draw from the pilot phase?

When we were nominated as a finalist for the BCP Award, we were in preparation of the pilot phase. Up until then we had had a validation of our technology only in the lab. At that point we were preparing everything for the field. Since then, we have installed our first swarm grid—eight interconnected households. We finalized and officially inaugurated the grid in 2015.

From my perspective, the biggest lessons learned were that as much as you are prepared with all the technical background, in the field, when you have direct contact with the end user, things are totally different.

To give you an example, we had quite odd behavior from one of our customers who decided to destroy one of the boxes with a big hatchet because he thought it was a bad sign from a divinity. How can you be prepared for such reaction? Another thing, for example, was the way the box looked. I remember that the first prototype looked… I wouldn’t say fancy, but very cool from our perspective. But in the field we received negative feedback from end users who thought there were too many LED lights on the device itself, or that there were too many buttons, or that the display was not big enough. So we had to adjust to all these different demands coming from the customers, and we made several iterations of the technology until we ended up with the best product.

So those I would say are the biggest lessons learned, and they will be very useful now that we are trying to install the second and the third grids.

 

What have been the biggest challenges in applying the product on the field and scaling up the project?

For sure, financing. Because as a company you are in that development phase, somehow phasing out of the startup stage into a more mature company where you have to deal with complex operational and logistical problems. For example, one of the biggest challenges we have at the moment is setting up the production line.

Other challenges are assuring product quality, validating the product… Moving from the startup stage to mature company phase, we had difficulties in finding financing because on the one hand you are not proving your concept anymore and therefore there are not too many grants available to you, and on the other hand, if you are discussing bigger investors, like equity investments, they need more financial stability. They want to see bigger returns from you, but you are still developing your business model and scaling up. It’s a bit on an edgy situation and it is quite frustrating at times. This was our biggest challenge.

We were lucky in that we found financing and we have all the orders for the next three months of production. And we are certain that our technology is validated in the field, so everything should go smoothly. At this point we are just waiting for more orders and thinking about how we will expand our production capacity.

 

What feedback have you received from your target customers in rural off grid communities? What do they think of trading and paying for energy digitally?

Initially this was quite new for the customers and we had to spend some time explaining the concept. Although I must say that Bangladeshi people are very much aware of solar technology, what it means, how it works, so they are quite familiar with the terminology. But still the concept of sharing energy was a bit more complicated.

They didn’t have anything against [trading energy] but it took a bit more time to explain its benefits. Also, internally in the village, there are sometimes interpersonal conflicts between neighbors; but the way the grid is set up the electricity is digitalized in an anonymous marketplace, so they are not selling directly to each other. Trying to explain this was a bit complicated but it worked out in the end.

With the money they receive from sharing electricity… Sometimes they reuse it to buy electricity when they have a peak in their consumption. At other times they save it, and they feel that this is one of the safest ways to keep the money because basically the money is stored in the battery and, how can you steal that?

They even started calling their solar home systems a kind of savings account. If they have any additional money they use it pay back whatever micro-loans they may have.

 

Have the expected results, in terms of energy efficiency and money savings for end users, been met?

We are still in the monitoring phase, and we want to increase the number of the policies included in the grid to have a more relevant number. We were expecting that the technology works, that there would be some sort of trading happening, and we wanted to see when the trading was happening. Those were our expectations when we started this, and we have checked all those boxes.

Now it’s about stimulating the ownership of our customers and creating something more productive out of this.

So for example, we are introducing productive-use appliances like a rice husk mill, and observing what is happening there, if electricity is traded between the households for that specific appliance.

We are exploring the business models that could be created out of this to make it a more useful service, not just an energy service but also a business service for the population.

 

What are SOLshare’s goals for the future, in the short- and long-term?

Our goals for the short- and medium-term, would be to expand our production facility, to reach a certain production number per month or per day for both of our products, and to reach our target.

We are talking about thousands of nano-grids we want to install in the next five years in Bangladesh.

Longer term goals, in 5 to 10 years, would be to expand in Asia, in neighboring countries. We have been approached by different distributors from Southeast Asia who have seen our product online and want to commercialize it in their countries; but at the moment we don’t have a business model for this.

We also want to see if we can replicate this model in Africa. This is also interesting for us, to see if our product can be adapted to different countries, different markets.

 

Why did this project start in Bangladesh? Are there any factors that made it a particularly apt place for the spread of peer-to-peer electricity trading?

There were two reasons for “Why Bangladesh?”… First, Bangladesh is the most vibrant country in the world and the most amazing market in terms of solar home systems. Under the IDCOL Programme, there were more than 4.1 million solar home systems installed. That’s a crazy number.

The market is extremely well regulated. And what is even more beautiful about it is that this partnership between the suppliers of solar home systems and the micro finance institutions started this entire green micro finance approach. It basically all started in Bangladesh. So this is one reason why Bangladesh.

The second one has to do with the story of our company, Microenergy International. When our two founders went to Bangladesh more than 15 years ago to write their masters’ theses, they were so impressed by this model—the greenmarket finance model—that they decided to try to replicate it all over the world. So that is how Microenergy started. We seek to promote energy and financial inclusion throughout the world. But also, the two founders of the company had the idea of swarm electrification—a bottom-up way to energize and empower the population to become not only consumers but also producers of electricity, while taking advantage of the already existing infrastructure.

SOLshare doesn’t install additional panels and so on, but builds on top of something that is already existing. So that is why Bangladesh…We came to our roots: we had the idea of swarm electrification and we wanted to test it and show that it is a viable approach, and Bangladesh was the best place to do this.

 

What is MEI’s role in both of these projects—SOLshare and Clean Energy Promotion through Microfinance in Ethiopia?

Microrenergy aims to integrate and promote financial inclusion and energy inclusion. This can mean quite a lot of things: on the energy side it means that you have to acquire a lot of technical knowledge so that you can understand quality standards, estimate and optimize energy consumption patterns, and so on. You also need financial understanding, particularly – for example, regarding the ability and willingness of users to pay for a technology, the pay back that can be obtained from the technology, etc. So this is what financial energy inclusion means.

We have been doing this for 15 years through technical assistance to financial institutions all over the world, either teaching them how to start from scratch with the greenmarket finance approach or helping them scale up their approach. That is what we are doing in Ethiopia.

Through these projects we gained a lot of knowledge and we decided to transform this knowledge into a product: that is how we started SOLshare in Bangladesh.

 

Can you briefly explain the scope and outcomes of the Ethiopia project?

I don’t know all the technologies [involved] by heart; certainly we have solar home systems, PV lamps, and I believe cooking stoves were also being introduced but I am not 100% sure.

What we did in Ethiopia was connecting the microfinance institutions [MFIs] with the suppliers of the technologies and created what is called a two-hand business model. In this way we supported the supplier in having their product reach a larger base because the MFIs usually have a more extensive outreach than the technology suppliers.

It also helped the suppliers deliver the product faster because sometimes the product is installed and delivered through the loan officer, and the loan officer does once a week, twice a week visits to the same village, rather than a supplier or distributor who comes only once every couple of months. It also enables a faster reaction of the distributor or the supplier to the needs of the end user; so for example, if there are any malfunctions or spare parts that need to be changed, the communication goes faster through the loan officer. The loan officer can also [provide technical support] himself, because he has received some basic training from the technology supplier. So this is how the model works and this is how we try to solve the supply chain issues.

At the moment we are in the process of centralizing all the [monitoring] information because we worked with three different microfinance institutions and three different product distributors; so we are centralizing the data from the monitoring phase and evaluations.

 

Are there any other projects that you would like to highlight?

Regarding the Ethiopia project, I can say that we are now about to close the project and we are looking into ways to continue supporting the microfinance institutions so they can independently put in place everything they learned from us and keep adding technologies to their portfolios.

We have a similar project in Cambodia with one of the biggest banks in the country. This is a kind of project that Microenergy International has done since the beginning, and it is always nice to do it in a new country.

We are also looking into different types of green financial products such as green micro insurance in Bolivia. And apart from this we have many small ongoing projects, always in relation to microfinance.

 

(Photo credit: ME SOLshare Ltd.)