Every morning in Tanzania, the strong East African sun rises above the roofs of millions of homes. For the estimated 35 million Tanzanians without access to electricity, or eighty-two percent of the population, this daily event will have an entirely new meaning thanks to an innovative pay-as-you-go solar company supported by Power Africa agencies.[1]
This lack of access to electricity is exactly what Erica Mackey set out to address when she launched Off-Grid: Electric in 2011. Rooted in her experience as an American living in Tanzania establishing mobile clinics and training rural health workers, Mackey made plans to deliver what people around the country were telling her was their greatest need: affordable electricity.
A founding partner of Power Africa’s Beyond the Grid program, Off-Grid:Electric is part of an emerging private sector in developing nations that employs an innovative payment model to reduce the cost and risk for low-income households to adopt solar. By combining the small fee, prepayment model of the mobile phone business with solar panel home installations, Off-Grid:Electric and other companies in the pay-as-you-go small-scale solar sector are quickly extending access to the vast number of potential customers in underserved communities.
Off-Grid:Electric does not sell solar products to customers, instead it leases them as a business service. Customers pre-pay for the service in increments as small as twenty cents a day, with monthly rates as low as $5. Customers can top-up their accounts in small amounts and pay with their mobile phone or at a local kiosk. Rooftop panels are delivered by a local sales force and the customer has access to a 24/7 toll-free service line. If it’s a repair, replacement, or upgrade, Off-Grid:Electric’s network of service agents provide in-home service at no cost.
The company has more than an innovative sales model. Off-Grid:Electric also taken an innovative approach to public and private sector financing. Power Africa agencies have supported the company since early 2013 at varying stages, helping the company grow, improve, and attract substantial private capital investment.
USAID’s Development Innovation Ventures (DIV), an innovation fund within USAID’s U.S. Global Development Lab, invested an initial $100,000 in 2013 to pilot operations in Tanzania. The company also received $200,000 in funding in 2013 from the Overseas Private Investment Corporation’s U.S.-Africa Clean Energy Finance (ACEF) Program. ACEF support allowed Off-Grid:Electric to upgrade software, and optimize hardware design and supply chain management. These efforts were critical for the company to better serve its existing customer base while allowing it to scale quickly.
Between 2013 and 2014, the number of homes receiving electricity from Off-Grid:Electric jumped from 1,000 to nearly 30,000. The company built on its early success by refining their sales model with initial public sector support and raised $7 million in private equity led by U.S. investors SolarCity, Vulcan Capital, and Omidyar Network.
“Because of USAID’s Development Innovation Ventures’ catalytic support, we were able to get here. We have raised millions in venture capital, putting our mission to light millions of African homes in the next decade into our sights,” said Mackey.
DIV invested another $1 million in late 2014 and in early 2015 the company secured another $16 million in equity financing led by SolarCity, Zouk Capital, and Vulcan Capital, as well as an additional $7 million loan from the IFC and its partners. Together, these events culminated in the 2015 launch of the Million Solar Homes Initiative with a new partner, the Government of Tanzania. The effort seeks to provide affordable off-grid energy to one million Tanzanian households, while creating 15,000 jobs by the end of 2017.
As a Power Africa partner, Off-Grid:Electric’s goals in Tanzania and beyond are an essential part of Power Africa’s larger effort to create 60 million new home and business connections throughout all of sub-Saharan Africa. “When people look back at this decade, they’ll remark that this is the period when Africa went solar,” said Mackey. “Power Africa will enable a continent to communicate on charged mobile phones and computers. It will enable a continent to perform better in their studies because they can do their homework after the sun goes down, enabling a more productive and healthier society.”
[1] United Republic of Tanzania, National Electrification Program Prospectus, July 2014.
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