MobisolSolar Home Systems: A money-making machine
Electricity comes out of the socket, most of us would say. But of course that is not the case everywhere. The German start-up Mobisol has brought solar systems to remote areas in Ruanda and Tanzania. Apart from providing green energy, they have generated jobs and a source of income for locals. Read More
As you read this text, you are certainly sitting in front of a computer, mobile phone or tablet, perhaps sipping at a nice cup of tea or coffee while enjoying your reading – and your device is most probably plugged into the next socket. We urban dwellers and internet junkies are spoiled by omnipresent electricity that comes out of the socket whenever we want: just plug in and you’re good to go. But what if there is no socket in sight because the central electrical network does not extend to your region?
The story of Mobisol began four years ago in Tanzania and Ruanda, two countries in which around 80 per cent of the population have no access to the central electricity network. Back then, international subsidies had dropped the price of solar technology to a point that almost anyone worldwide could afford it. In Germany, innumerable homeowners took advantage of the situation, outfitting their roofs with solar panels to generate their own electricity.
In Berlin, Mobisol founder Thomas Gottschalk, who had travelled extensively in East Africa, began to wonder: If solar energy works for cloudy and rainy Germany, how many more people could benefit from it in the sun-drenched countries of Tanzania and Rwanda?
Thomas knew that most people there use kerosene or diesel generators to produce electricity, which not only pollutes the atmosphere, but also severely endangers their health. His considerations gave rise to Mobisol: A start-up that should bring green solar energy to East Africa, an independent source of electricity with no negative health implications.
If solar energy works for cloudy and rainy Germany, how many more people could benefit from it in the sun-drenched countries of Tanzania and Rwanda?
Together with his co-founder, Thomas developed the Solar Home System that provides customers with everything they need to access green electricity around the clock: A solar panel, a battery, a box with electronic equipment and a series of interfaces, depending on the model, in the form of electrical outlets, device plug-ins, lamps and mobile phone chargers. The battery and the panel are made in China; the electrical equipment is from Germany.
Customers purchase the system on a three-year payment plan. Typically, the installment costs no more per month than kerosene or diesel. With one distinct advantage: The system is fully paid for in three years. Electricity is free from then on and the customer owns the system. This equation easily convinces potential customers. “Demand is not even an issue,” says Thomas Duveau, head of business development at Mobisol. “We could easily open up a shop in every larger village.”
Three years ago, the project started near the city of Arusha in Northern Tanzania. Since then Mobisol has worked step by step, founding over 20 subsidiaries in Tanzania and Rwanda. Over 25,000 systems have been installed to date. “We really don’t need to do any promotion locally,” Thomas reports. “When one or two customers install a system, the other villagers witness how good it works for them. Many of our customers come to us because their neighbor recommended the Mobisol System.”
When a customer walks into a Mobisol shop, employees first talk to them about their specific needs: Is a customer looking to power a small or large home? Do they plan to open a small shop? The range of products is designed for a wide array of applications, and customers can chose just the right package from the smallest module powering three lights, a radio and a few mobile phones for nine dollars a month to a business kit for 45 dollars a month. Then an appointment is made with a Mobisol installer who sets up the system at the customer’s home and voilà: the household can start producing its own green energy.
Guaranty? Never heard of it.
“The most difficult part is the last-mile delivery,” Thomas explains. “That is getting the equipment directly to customers in areas that are sometimes very remote, and organizing maintenance there as well.” This is made possible by a technology designed exclusively for Mobisol: All Mobisol systems have a built-in database that tests the system every 10 minutes. If a defect occurs, a pre-installed SIM/GMS card reports the problem directly to the responsible technician. “Mobisol often knows there is a problem even before the customer does.”
When the technician gets the message on his mobile phone, it informs him exactly of the kind of defect he will have to fix. Therefore he can drive directly to the customer with the right parts and does not have to travel back and forth. “We don’t repair anything on location; we just replace parts.”
In order to offer this level of technical support, Mobisol trains in-house installers and repair people at the Mobisol Academy in Arusha, Tanzania and Nyamata, Rwanda. Around 150 Academy graduates work in Tanzania and roughly 50 in Rwanda on commission and drive out to customers whenever a problem occurs.
One of the unique services Mobisol offers is a three-year guaranty. “Most of our customers have never heard of a product guaranty,” Thomas tells. “There is no exact word for it in Swahili. We always have to explain the concept first.” The call center is also a new concept to many. Customers can call 15-hours a day for free with questions or to report a failure.
“A money-making machine”
For business developer Thomas, one key element of Mobisol’s success is the proximity to its customers. Although the two founders were Germans, today, 95 percent of all employees are Tanzanians and Rwandans. Besides, a lot of the ideas the company has implemented were generated in conversation with customers or emerged from suggestions made by employees. Such as the business kit concept, for instance:
“We initially thought our customers would primarily buy the small system,” Thomas recalls. “But that turned out not to be the case since you can earn a lot of money with the big systems.” A Mobicharger, for instance, the Mobisol mobile phone charging station, can charge ten phones at once, a service other people are willing to pay for. “If you buy a Mobicharger, charge 30 mobile phones a day and charge just 10 cents per phone, you can earn 3 euros a day,” he continues. “A customer once told me: ‘You are selling a money-making machine.’”
Today around 40 percent of all Mobisol customers earn money with their systems.
This was how the idea to sell business kits came about. When a customer comes into the shop and says he or she is looking to open a business, Mobisol employees can offer a whole range of packages. There is the “Solar Barber Shop” kit, for example, for hair salons. In addition to the Solar Home System, it includes an electric razor and marketing material like flyers and signs. Today, around 40 percent of all Mobisol customers earn money with their systems.
The best earner of all business kits is probably the Village Cinema Kit. It includes a small projector and speakers so the owner can set up an open-air movie theater. “This was huge during the last Football World Cup, when public viewings were held for the first time,” Thomas recalls.
Some cinema operators used a satellite receiver to project the World Cup games onto the largest wall in the city. Today they also show films and TV series. “Some people have become addicted to their favorite series, just as in Europe. The cinema events light up the otherwise fairly dark village squares, creating a whole new space for exchange and community.”
Even more off-grid power for Rwanda
“In general politicians are happy with what Mobisol is doing because we have created jobs through the Academy,” Thomas reports. Nevertheless, working with politicians is not always easy. “It was a really big setback for us when one of the governments introduced a tax on solar products and made kerosene and diesel tax-free. The lobby against solar energy is unfortunately still very powerful.”
But some wonderful things have happened too. “So far the Rwandan government has been the only one to officially announce that it would like to give most Rwandans access to energy, including off-grid power, and would support small, decentralized solutions.” Together with the EU, the Rwandan government has set up a program supplying 50,000 households and schools with Mobisol Solar off-grid electricity.
“Many customers are very proud of the systems they own.”
“A long-term partner that has supported Mobisol along the way is DEG, the Deutsche Investitions- und Entwicklungsgesellschaft,” Thomas explains. The German development and investment society has accompanied Mobisol through different growth phases: It financed a pilot project in 2012, which allowed Mobisol to pre-finance around 2,000 solar home systems. Afterwards, DEG provided financing on two more occasions using funds from its up-scaling programme, a programme to promote innovative business models. And since July 2015, DEG has also held an equity stake in the company.
Mobisol is now planning for the future: The company has been active for over four years now, so the first customers have fully paid their systems off. “Many customers are very proud of the systems they own,” Thomas explains. “The question facing them now is where to go from here?” The Mobisol team is talking to customers about their options. They can decide if they wish to extend their guaranty by continuing to pay a small monthly fee, or assume responsibility for maintenance and repairs themselves.