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- Reversed Rural Electrification
Reversed Rural Electrification
Voting Summary (Elevator Pitch):
1.5 billion people spend $38 billion/yr on kerosene lighting, having no electricity. Barefoot Power will help 1 million people access modern, clean electricity, using digital LED lighting and advanced microenterprise-creation freeware.
Supporting organization:
Barefoot Power
URL:
www.barefootpower.com
City:
Sydney
State/Region:
NSW
Country:
Australia
Project Vision Statement & Potential Social Impact:
1.5 billion people live without electricity, about half in India and half in Africa. These 300 million households spend around $1/week on kerosene for lighting and batteries, totalling $15 billion/year or more (see www.ifc.org/led). ICT is spreading rapidly across Africa, but electricity access is not keeping up. However, the digital revolution has also produced white LED lighting and more affordable energy, such as 1-5W solar panels. Barefoot Power has been set up to reverse rural electrification. We aim to bring electricity to 1 million people in 4 years by installing lamps, housewiring, small batteries, small solar panels and/or battery chargers in households. The smallest product, a rechargeable LED lamp, would cost about $5, meaning cash purchases are affordable, disruptively diverting the massive kerosene cash market towards longer lasting, efficient, clean technologies. This is the hardware. Hardware must be matched by software. Barefoot Power will develop dozens of business plans with partners at no cost via email, involving collaborative document management, web-based GIS mapping of villages and a global network of experienced advisers. Semi-volunteer project managers will be required to help manage and train on-ground partners. Finance will be offered in the form of supplier credit, and also in partnership with microfinance instutions. Skype, email and other ICT communication innovations will be key to organizing this highly distributed project at low cost. Finally, it may be possible to generate peer-to-peer global supplier credit via asset based purchasing instead of loans or equity investments - a type of ebay on credit. The impact will be the creation of hundreds of energy microentrepreneurs in East and West Africa, South Asia and the Pacific, helping 1 million people in several countries gain access to electricity within 3-4 years.
Sustainability (financial) model:
The model requires software and hardware. The software is free - Barefoot Power will absorb the cost of business plan development, on-ground project managers to work with local partners and managing a global network of suppliers, financiers, distributors and volunteers via a purpose built website. Open source tools such as Open Office, freeGIS, SugarCRM and Open4Business will be used to develop free customized packages for partners. Revenue and profit is generated from distribution of hardware. The first years of sales involve lamps, housewiring, batteries, solar panels and chargers. Distributors (national, district, local) will have a 25% gross margin for each 2-4 month shipment of products, allowing a 20-40% net profit each year. Gradually products will change from home lighting to village minigrid technologies. For $100,000 setup cost, and 10% net annual profit on capital, required break even sales are $1,000,000. This is ten 20-foot containers for 25,000 households (100,000 people). Sending 3 containers to 3 countries 3 times per year would meet this target in 12-18 months. Pilot projects have started in Papua New Guinea and Fiji. Strong interest is coming from partners in Ghana, Kenya, Uganda, Bangladesh and India.
Potential obstacles:
Obstacles will include > product quality and suitability for village electrification, > balancing the quality/cost tradeoff, > migrating households to bigger and better home electricity systems by upscaling systems in low cost increments > keeping overhead costs low in a thinly spread global small business > keeping supplier credit defaults low via sensible partner selection and initial low credit tests > convincing investors there is a viable market in village energy is potentially explosive as Africa telephony
Resource Needs:
The plan will require the following resources: > product development of low cost, good quality products for village electrification (almost complete) > sophisticated project and business management software to manage hundreds of network participants, including suppliers, shipping companies, staff, project managers, financing partners, distributors, retailers, villages, network catalysts, microfinancing partners and volunteers > low cost enthusiastic project managers to help on-ground activities (a stock option program has been designed), possibly with participation of volunteer sending agencies > committed entrepreneurs at all levels in developing countries > a healthy mix in staff of rational planning, determination, imagination and mild insanity.
Key Milestones:
2006 to early 2007 - conduct pilot projects, refine April-May 2007 - ship first products to PNG, Fiji June-Jul 2007 - scale up investment, start website development for couping ERP software with GIS Aug-Sep 2007 - send two containers, expand to Africa and Asia with $20,000 pilot projects Oct-Nov 2007 - consolidate learnings, first live test of software Dec-Jan 2008 - send 4 containers to Pacific, South Asia, West and East Africa Feb-Mar 2008 - fully develop distribution in these countries, roll out software to partners Apr-May 2008 - add more project managers, scale up to 5-10 containers, break even by mid 2008, then expand as required
Project Summary:
Reversed rural electrification aims to divert a small portion of $15-30 billion/year spent by the poor on kerosene lighting, to invest it in clean, efficient energy technologies such as white LED lighting and pico power (solar or other). This requires sophisticated global project management software, communications and network management for a small team to help 1 million people gain access to electrcity within 4 years.
Comments
In support of Energy supply and alternatives
In support of this and other projects like this
Great Idea, my organization
Great Idea, my organization is working in the access to telecomunication layer, because of the most rural communities in Peru dont have access to electric grid we are looking for partners to deliver telecomunications/microfinances/electricity to rural communities.
http://microtelco.culturalibre.info
Peru
Thanks for the comment. I'll visit your wesbite and drop you an email to see if we can do some work together, or at least if we can provide some engineering advice. We have telco partners in Uganda and Nigeria too, and as you must need communication to implement a project like this, I see IT and electricity being a natural combination, so would enjoy hearing more about what you are doing. I will try to make an interactive part of our website later this year, so you can link up and chat with the guys in Uganda and Nigeria (if they want to also), and so active partners can be aware of each other and compare ideas and strategies for the project.
Huge, exciting concept
progress so far
Hi. In answer to your query, we've managed to raise about US$150k so far, of which about half has gone into the first container of products, and the other half into product development and company establishment (including initial marketing). We are currently negotiating another $80k from one of the largest microfinance organizations in the world, to pay for a second container as the beginnings of scaling up (assuming the first container sells as well as we think it will from market trials). We believe their investee microfinance partners may have as many as 1 million clients that are still using kerosene lighting, so just working through this network alone to eliminate kerosene would get us to a level of a $10-20 million company, where investors can exit. But we're actively chasing other customers and partners too...
I am working full time (7 days a week, 15 hrs a day) on this, at a survival salary of about $10k per year - used to earn $70k plus designing large wind farms in Australia before, but got bored with corporate engineering and wanted a real challenge. I also spent 2 years in Nepal doing micro hydro for villages, so having worked at the big and small ends of town, I've ended up choosing the small end, it's more fun!
We have a capitalization plan that involves raising about $1.5-2.5 million in equity and the same in debt over the next 3 years, in realistic but ambitious 6 month steps of expansion.
Thanks for the comments, glad you liked the concept! If you have any skills that could help, we're setting up a network of "volunteers" who can, I hope, help us with the hundreds of tasks we find ourselves with. I hope to set up a website with task requests kind of similar to a freeware sourceforge collaboration site, but haven't yet got around to it (need to integrate this into a workflow management software package, so we pack little tasks out onto the website, but I've got no idea how to do this...)