Off-Grid Electric (OGE) is a power services company based in Tanzania. The company makes solar power accessible to houses in remote areas, where public infrastructure such as power transmission lines is not present, or to households where it is too expensive to connect to the power grid. It does so by first selling a proprietary power system consisting of a small box, and a small solar panel. The box can provide electricity to a small home system at either a 5 Watt or a 10 Watt level. While that may sound small, it is enough to power a few LED lamps and charge a phone, which is a substantial improvement for a rural household that is completely lacking in electricity.
Inspiration: The Prepaid Cellphone Model
The cleverness of their business model lies in their adaptation of the prepaid cellphone model for their service. Cellphone usage has grown dramatically in developing parts of the world, primarily due to the prepaid business model. This model allows users to purchase a limited amount of “minutes” or “texts” for their phone, which they can then use on an as needed-basis. For the cellphone provider, this eliminates the risk of customers defaulting on their bills, which is a significant concern for any business in a less-developed economy. Cellphone users also benefit from this model as they know exactly what they are paying for, and can more efficiently use their money.
The introduction of prepaid model made cellphones more accessible to the developing world. In Tanzania, according to OGE, cellphone uses have far outstripped the spread of the electric power grid, which is where they come in.
More Power to the People
A customer seeking to put OGE’s solar home system pays an initial deposit of $6 or $9 per system, and then a daily fee between $0.19 and $0.63, depending on the level of service. Payments are made using mobile money, or through a local mobile money kiosk, or through local OGE agents who take cash and make payments for the customer.
Upon payment, the customer gets an activation code, which they can use to “add minutes” to their solar power system to provide power (OGE requires a minimum one day payment at a time, however the usage itself is pro-rated down to the nearest minute). Flexibility in payment means that those without reliable income can pay one day at a time, and those with seasonal income (such as agriculture) can pay for several months in advance.
It’s Also about the Service
OGE runs a customer service call center every day for 18 hours a day. The call centers are there for customers to report any problems, ask for any help on how to use their existing system, or questions on adding more services to their account such as an extra light, or more appliances such as a television. For issues that can’t be resolved over the phone, an agent is sent to the customer site.
Leveraging Local Agents
Agents are an important of OGE’s operating model, which is why OGE invests significantly in their success. These agents are local residents, and are therefore most knowledgeable about their local markets. They are responsible for finding and retaining customers. Each regional office has an “agent success” staff team responsible for recruiting, training, and supporting agents in the region.
The agents earn commission not only for finding customers, but also for providing good customer support (notice the connection here from the previous section on customer service). Therefore, even if agents have exhausted their immediate neighborhood for new sales, they can continue to earn through customer service. In many ways, these customer service agents can make or break the success of this company. They can also provide OGE with competitive advantage should any major competitor enter the market.
Electricity: Enabler of Other Products
Once households have electricity, it enables them to use other appliances such as TVs, computers, etc. In that regard, OGE is well-situated to sell these products to customers as well. Furthermore, because OGE has a history of its customer’s payments on their system, it can establish its own version of a credit score for that customer. This score can then be used to determine whether additional products should be sold on credit to the customer.
Ready to Grow!
OGE launched their services in Tanzania in April 2012, and within two years its customer base had expanded to over 10,000 households. They’ve
created an effective business in a difficult and foreign environment by leveraging existing local telecommunication infrastructure, and by hiring local individuals as their own agents. OGE is clearly a winner!
- Ashden Case Study. Available at: https://www.ashden.org/files/case_studies/OFF%20GRID%20FULL_0.pdf (Accessed on November 29, 2015)
- Crunchbase Company Profile. Available at: https://www.usaid.gov/news-information/frontlines/science-technology-innovation-and-partnerships/gridelectric-brings-solar (Accessed on November 29, 2015)
- Off-Grid Electric Company Website. Accessible at: http://offgrid-electric.com/