For more info: www.devergy.com
Devergy is a fast-growing energy solutions provider for off-grid rural households in Tanzania. In Tanzania, the market for solar energy is huge, as the national electricity supplier and distributor, TANESCO, fails to provide everybody with electricity - and its an euphemism. Indeed, only 12% of the Tanzanian population has TANESCO (not to mention multiple electricity cuts, lasting sometimes for several days); and only 20% has access to electricity at all.
Founded 3 years ago by Fabio de Pascale, an Italian engineer, the company has now 13 employees and manufactures and installs solar micro-grids in Tanzanian villages, providing access to affordable and scalable energy: customers pre-pay for their energy consumption thanks to mobile money, and extra capacity can easily be added to the micro-grid as needs for energy increase. In this manner, Devergy ensures that customers pay the right price for the electricity they use. The key to make it work? Some enthusiastic and creative engineers (and businessmen) who like playing with data…
Meet with Fabio de Pascale, co-founder and CEO (“Chief Energizing Officer”) of Devergy.
PRESENTATION
Planète D’Entrepreneurs: We are going to start with some questions about yourself ! How old are you ? What is your background?
Fabio de Pascale: This is a very personal question! I’m 32, I was born in Italy. I’m specialized in rockets, I started in Milan, then Munich and Holland where I worked for 10 years. I then decided to start Devergy with a friend. We founded it in 2010 and spent a year preparing the business plan. We started operations in March 2012.
PDE: Why Tanzania ?
FdP: I had no ties with Tanzania, in fact when I came here it was my first time in Africa! When we had to decide where we would start the business, we developed a methodology considering every country in the world. We put together a ranking of countries, based on different parameters and data we collected like electrification rate, GDP, ease of doing business... Finally we looked at the top 5, and after talking with locals and doing deeper research, we chose Tanzania.
PDE: What is the main idea behind Devergy?
FdP: The challenge in energy access is to provide energy at a very low cost. In order to achieve that, scalability and suitability with needs is crucial. In Europe, a typical household needs 2 to 3 kW. Here in Tanzania? A lot less, since most households have very basic needs: lighting and phone-charging mainly. Then maybe a radio or a TV. However many energy suppliers in Tanzania reason like they are dealing with European households, and sell big solar systems that can power big appliances. Problem is that they simply cannot afford them, it’s like you wanting to buy a nuclear plant or a jet… you simply cannot buy them even if you wanted to! To provide Tanzanians with cheap electricity access, you need to know exactly what they want and need to use for you not to have useless costs, and for them not to have useless expenses. We want people to pay for what they consume, and solar micro-grids are a very effective solution to do that.
PDE: So why micro-grids?
FdP: Micro-grids are scalable: you can add watts whenever you need it, for example when customers start to buy TVs, simply by adding new modules (tripods). So it’s perfect for PAYG electricity. But our micro-grids have something special: in a traditional sense, micro-grids mean that you have a plot of land, where you put panels and inverters, and cables to go in the households. But it’s not sustainable financially; this is for technical reasons mainly. People think AC is necessary for transmission, and there are mainly AC appliances in the market, while electricity is transported in DC. Therefore to use your appliances you need inverters to convert DC current into AC. These inverters have a cost, and it is even higher with micro-grids, because by nature they are scalable, so you continuously have to add inverters to the grid as they depend on the power of the system. Stackable inverters exist, but they cost 4 times a normal inverter… Our solution consists in removing the inverter and using DC appliances; because, contrary to what everyone says, DC works perfectly for transmission as well!!
PDE: How can people get these appliances?
FdP: Well… If you want to start a DC appliance business in Tanzania, I really encourage you to do so! These are new and the offer is very limited: we need to produce them ourselves and sell them to our customers. We were a bit worried at first that it would deter customers to use our system, but actually we have found many advantages: first of all, if we provide the appliances, we know their wattage so we can easily predict customers’ consumption and needs. Second, we provide high quality and very energy-efficient products to be used on our system: we need to be energy-efficient, because the company owns the system, not the household. If a customer buys a non -efficient AC appliance he finds on the market, he will have to pay a lot in energy, and will think the company is over-charging him. Or we might even have to shut him off as we could not afford to add capacity only for him. In addition, you can have technical problems. It is a problem many AC micro-grid companies face. So it is important that customers cannot plug anything by themselves.
PDE: How do you know when to add modules on your system?
FdP: We get a lot of data from our systems: when we see the consumption is growing in a village, and when it is getting close to the maximum limit, you can increase the power of the micro-rid, by installing new systems. We use 60W tripods to keep as close to the actual consumption as possible. We place them in the village, but they are independent from each other, as they are part of the whole grid: if one breaks, everyone in the village gets electricity.
PDE: How do you spot the right villages and reach customers?
FdP: (Showing us a map of Tanzania, with colored spots) We collect data on villages and analyze them to spot the most interesting villages for us, we then go there and try to convince them! When we have an authorization letter from the village committee, we start the installation. One month later, the cables and tripods are installed, and about 78% of the village has signed up for it and got a meter at their home. Now we operate in 6 villages (in Morogoro and Bagamoyo regions), with 800 customers.
PDE: How do customers pay you?
FdP: Customers pay via M-Pesa. It is pay as you go (pre-paid), around 7$ for a month of electricity (for basic appliances: lighting and phone-charging). They have to pay a small connection fee (20$) upfront; it’s important to make them contribute, so they are involved in the process and motivated to get the connection.
PDE: What about financing?
FdP: We are not profitable yet, we need 2 more years of operations. We have got equity investors interested who are supporting us now, but the main challenge is to reach lenders. They are not easy to convince, because the market is new, customers are not solid (before being called customers, they were just “poor people”), there is also a political risk… But there are a billion potential customers. We are not at all worried about the competition, in fact when one of our competitors makes a step forward, I open a bottle of champaign! It’s justifying our activity and making us all progress. I think things will move in the future…
PDE: What are the challenges that you see for the future?
FdP: The main challenge that I see, if we put aside financing etc., is education and human resources. The country lacks a solid education system and recruiting smart and qualified staff is difficult.
PDE: And what about your dreams?
I think I would like to reach a million customers. I expect to have 100,000 of them in 5 or 6 years!
My aim with Devergy is to provide a choice: just because you are born in Tanzania, you don’t have a choice, of having a TV, a radio? I personally think TV is bad, but I think that if you want a TV, whatever, you should be able to have it!
Devergy is a fast-growing energy solutions provider for off-grid rural households in Tanzania. In Tanzania, the market for solar energy is huge, as the national electricity supplier and distributor, TANESCO, fails to provide everybody with electricity - and its an euphemism. Indeed, only 12% of the Tanzanian population has TANESCO (not to mention multiple electricity cuts, lasting sometimes for several days); and only 20% has access to electricity at all.
Founded 3 years ago by Fabio de Pascale, an Italian engineer, the company has now 13 employees and manufactures and installs solar micro-grids in Tanzanian villages, providing access to affordable and scalable energy: customers pre-pay for their energy consumption thanks to mobile money, and extra capacity can easily be added to the micro-grid as needs for energy increase. In this manner, Devergy ensures that customers pay the right price for the electricity they use. The key to make it work? Some enthusiastic and creative engineers (and businessmen) who like playing with data…
Meet with Fabio de Pascale, co-founder and CEO (“Chief Energizing Officer”) of Devergy.
PRESENTATION
Planète D’Entrepreneurs: We are going to start with some questions about yourself ! How old are you ? What is your background?
Fabio de Pascale: This is a very personal question! I’m 32, I was born in Italy. I’m specialized in rockets, I started in Milan, then Munich and Holland where I worked for 10 years. I then decided to start Devergy with a friend. We founded it in 2010 and spent a year preparing the business plan. We started operations in March 2012.
PDE: Why Tanzania ?
FdP: I had no ties with Tanzania, in fact when I came here it was my first time in Africa! When we had to decide where we would start the business, we developed a methodology considering every country in the world. We put together a ranking of countries, based on different parameters and data we collected like electrification rate, GDP, ease of doing business... Finally we looked at the top 5, and after talking with locals and doing deeper research, we chose Tanzania.
PDE: What is the main idea behind Devergy?
FdP: The challenge in energy access is to provide energy at a very low cost. In order to achieve that, scalability and suitability with needs is crucial. In Europe, a typical household needs 2 to 3 kW. Here in Tanzania? A lot less, since most households have very basic needs: lighting and phone-charging mainly. Then maybe a radio or a TV. However many energy suppliers in Tanzania reason like they are dealing with European households, and sell big solar systems that can power big appliances. Problem is that they simply cannot afford them, it’s like you wanting to buy a nuclear plant or a jet… you simply cannot buy them even if you wanted to! To provide Tanzanians with cheap electricity access, you need to know exactly what they want and need to use for you not to have useless costs, and for them not to have useless expenses. We want people to pay for what they consume, and solar micro-grids are a very effective solution to do that.
PDE: So why micro-grids?
FdP: Micro-grids are scalable: you can add watts whenever you need it, for example when customers start to buy TVs, simply by adding new modules (tripods). So it’s perfect for PAYG electricity. But our micro-grids have something special: in a traditional sense, micro-grids mean that you have a plot of land, where you put panels and inverters, and cables to go in the households. But it’s not sustainable financially; this is for technical reasons mainly. People think AC is necessary for transmission, and there are mainly AC appliances in the market, while electricity is transported in DC. Therefore to use your appliances you need inverters to convert DC current into AC. These inverters have a cost, and it is even higher with micro-grids, because by nature they are scalable, so you continuously have to add inverters to the grid as they depend on the power of the system. Stackable inverters exist, but they cost 4 times a normal inverter… Our solution consists in removing the inverter and using DC appliances; because, contrary to what everyone says, DC works perfectly for transmission as well!!
PDE: How can people get these appliances?
FdP: Well… If you want to start a DC appliance business in Tanzania, I really encourage you to do so! These are new and the offer is very limited: we need to produce them ourselves and sell them to our customers. We were a bit worried at first that it would deter customers to use our system, but actually we have found many advantages: first of all, if we provide the appliances, we know their wattage so we can easily predict customers’ consumption and needs. Second, we provide high quality and very energy-efficient products to be used on our system: we need to be energy-efficient, because the company owns the system, not the household. If a customer buys a non -efficient AC appliance he finds on the market, he will have to pay a lot in energy, and will think the company is over-charging him. Or we might even have to shut him off as we could not afford to add capacity only for him. In addition, you can have technical problems. It is a problem many AC micro-grid companies face. So it is important that customers cannot plug anything by themselves.
PDE: How do you know when to add modules on your system?
FdP: We get a lot of data from our systems: when we see the consumption is growing in a village, and when it is getting close to the maximum limit, you can increase the power of the micro-rid, by installing new systems. We use 60W tripods to keep as close to the actual consumption as possible. We place them in the village, but they are independent from each other, as they are part of the whole grid: if one breaks, everyone in the village gets electricity.
PDE: How do you spot the right villages and reach customers?
FdP: (Showing us a map of Tanzania, with colored spots) We collect data on villages and analyze them to spot the most interesting villages for us, we then go there and try to convince them! When we have an authorization letter from the village committee, we start the installation. One month later, the cables and tripods are installed, and about 78% of the village has signed up for it and got a meter at their home. Now we operate in 6 villages (in Morogoro and Bagamoyo regions), with 800 customers.
PDE: How do customers pay you?
FdP: Customers pay via M-Pesa. It is pay as you go (pre-paid), around 7$ for a month of electricity (for basic appliances: lighting and phone-charging). They have to pay a small connection fee (20$) upfront; it’s important to make them contribute, so they are involved in the process and motivated to get the connection.
PDE: What about financing?
FdP: We are not profitable yet, we need 2 more years of operations. We have got equity investors interested who are supporting us now, but the main challenge is to reach lenders. They are not easy to convince, because the market is new, customers are not solid (before being called customers, they were just “poor people”), there is also a political risk… But there are a billion potential customers. We are not at all worried about the competition, in fact when one of our competitors makes a step forward, I open a bottle of champaign! It’s justifying our activity and making us all progress. I think things will move in the future…
PDE: What are the challenges that you see for the future?
FdP: The main challenge that I see, if we put aside financing etc., is education and human resources. The country lacks a solid education system and recruiting smart and qualified staff is difficult.
PDE: And what about your dreams?
I think I would like to reach a million customers. I expect to have 100,000 of them in 5 or 6 years!
My aim with Devergy is to provide a choice: just because you are born in Tanzania, you don’t have a choice, of having a TV, a radio? I personally think TV is bad, but I think that if you want a TV, whatever, you should be able to have it!