Nuru Energy began seven years ago with a simple notion: to build a sustainable, scalable solution to displace the dirty kerosene that, it is said, 1.6 billion people worldwide burn to generate light.
Study after study found that the world’s poorest spent upwards of 25 per cent of their income on kerosene, at a cost of $17 billion per year in Africa alone. Many of these studies also clearly outlined the difficulties inherent in changing this practice.
A 1991 study looking at the potential of photovoltaic technology in Rwanda cited high investment costs, unavailability of credit and maintenance and repair problems as hurdles to its widespread use. A more recent study of the off-grid lighting market in Africa found similar barriers to its scalability. Progress, it appears, has been slow.
Kerosene is an unsafe, expensive and environmentally unfriendly means of generating light. Yet, a few years ago, up to 90 per cent of Africa’s rural poor still used it. To better understand why, our team did something ‘radical’ – we (the team at Nuru Energy) spoke to the locals and asked them some questions. We lived in a village in the Republic of Rwanda for two months, observing and asking questions, and came away with a far clearer grasp of the problem.
Our aim was to create a solution from the ground up: one that mimicked the characteristics of kerosene, but that was cleaner and most affordable.
We learned that kerosene was portable, reliable and can be bought in increments: villagers can buy as little or as much as the cash they had in their pockets. We also saw that in poorest households, those with a daily income of less than $1.50, kerosene was primarily used as a source of lighting to carry out fixed tasks: cooking, studying, walking to the toilet in the middle of the night, etc.
Other lighting options in the market – such as solar lamps and home solar lighting systems – had prohibitive upfront costs. These ranged from $5 to 10 for the cheapest, high quality solar lamp to more than $100 for a home solar system. Even pre-paid home solar systems require a $15 or more upfront fee with a fixed daily $0.50 fee.
Our aim was to create a solution from the ground up: one that mimicked the characteristics of kerosene, but that was cleaner and most affordable. By helping the world’s poorest to spend less on energy, those savings could then be leveraged to help life them out of poverty. The solution had to make economic sense, and also fit within the culture these households were used to and valued.
Our answer was the Nuru Light, a portable, rechargeable light source that could be used alone for most household tasks. To create a reliable source of energy generation, we use both solar power and human power. Not only is human power a free source of power, but it is also available anywhere, at any time. In light of the fact that rainy seasons in Africa take up to three months in a year, human power works as a good back-up option.
To tackle the issue of affordability, we reviewed two successful business models. The first was from the telecoms industry. Given the explosive growth of mobile phones in rural markets, operators have clearly met the challenge of affordability. Their model is to build infrastructure and generate income through talk-time rather than by high margins on handsets. We also examined models that used collaborative consumption as a means to slash the cost for individual users, such as Netflix and Zipcar. In both cases, you don’t purchase the end product – movies and cars respectively – you just pay to use it when you need it.
The result was standalone recharge stations, located centrally and owned and operated by village-level entrepreneurs (VLEs). These entrepreneurs don’t take a margin on the Nuru Lights they sell to consumers, but do earn a small profit when they recharge the lights. This model cut the upfront cost for users, who then pay as and when they choose to recharge their lights.
To-date, we have set-up over 1000 VLEs, over 30 per cent of whom are women, across East Africa. These VLEs directly reach over 120,000 households, all of whom now have access to ultra-low cost lighting and mobile phone recharging services.
It's important to note that this scale-up has not been linear. What we discovered in the past year is that the poorest households in Rwanda and elsewhere have stopped using kerosene because cheaper, but poorer quality, flashlights have become more widely available, making it more difficult to convince the poorest households to spend on more sustainable options such as Nuru Lights.
These flashlights cost no more than $0.50 upfront (the kind you would find at any dollar store) and about $0.50 per month in disposable batteries, all of which end up in local landfills. To combat the plastic pollution and potential ground water poisoning from poorly disposed-of batteries, VLEs have had to accelerate market penetration by offering the Nuru Lights for free, with support from financial sponsors from Western countries, knowing that they will earn recurring income from recharges.
Innovation starts from the grassroots. Seven years ago, our technology and business model could not have worked, but today, as we combine both old and new technology, we have a fighting chance of alleviating energy poverty, once and for all.
This blog is part of a series of stories that highlights the serious efforts people are making to improve lives through energy access. Read the other blogs in the series by:
- Peju Adeosun from Virgin Earth Challenge on the latest solutions to energy access.
- Eli Mitchell-Larson from SunFarmer on delivering affordable solar to energy-hungry Nepal.
- Jesse Moore from M-Kopa on powering up Africa’s micro entrepreneurs.
- This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details.