Published on: Sep 21, 2023
Is the Powerblox too expensive for the Global South?
The simple answer is «No». With this question, it is very important to understand how our business model works in these countries. There are two basic models that we have implemented so far. Both with experienced partners in the respective countries, such as Africa GreenTec or Caritas Switzerland. Both organisations know the local country context and aspects such as local purchasing power very well and are specialised in generating positive impact. We always want to have our models critically scrutinised and reviewed and continuously improved.
The electricity sales model
In the first model, we sell electricity, to put it simply. This is very different from the models of the solar home system providers, where a separate infrastructure is built for each individual household. These leasing-based models are often a big financial burden for households over time.
For example, a USAID study from Mozambique (see image) shows a minimum price of $7.5 per month per household for basic services with local solar home system providers. We were able to offer a minimum price of 1.6$ per household per month in the same context. Instead of only 22% of the population as with the SHS offer, 80% could afford basic electricity with ours.
How do we do that?
The secret is that we always build a small local power grid, a so-called nano grid. Households consume very different amounts of electricity, as we have measured in the projects. With the nanogrid approach, we supply exactly as much electricity in the local nanogrid as is needed in total by connecting exactly the number of Powerblox devices to the grid that are needed for energy production.
In the beginning, this is often only one Powerblox for five to ten households. This also means that one kilowatt hour does not cost $10 to $20, as we have calculated with local solar home system providers, which also allows for lower subsidies.
The hire purchase model
In the second model, which we use for example in Uganda and currently in Ethiopia, we reduced the costs even further. Here we offer a hire-purchase model to local small businesses. These businesses in turn use the electricity to offer mobile phone charging services, for example, or public viewing of football matches and films. In addition, they now also sell electricity to neighbours and build up local grids independently, i.e. their own nanogrids.
The second model for local SMEs is structured from the rental prices in such a way that the bottom line is always more than the companies pay for rent. Often they want to own the Powerblox as quickly as possible and amortise faster than we expect. Currently, the model is still subsidised to a certain extent by Caritas, but this will no longer be necessary as the model scales up.