Changing Energy Use in Tanzania: EGG-Energy

Two years ago, eight individuals set out to re-think the way energy is used in Africa. They started with the 40 million people in Tanzania. Roughly 90% of Tanzanians do not have a connection to the electric grid. Most people use dim kerosene lanterns to light up their homes, and a mix of AA and old car batteries to power small devices such as radios, televisions, and cell phones.

Porch Light with Kerosene, used by 90% of Tanzanians. Photo by Eric Persha

Porch light with Kerosene, used by 90% of Tanzanians.
Photo by Eric Persha.

Porch Light with EGG Batteries

Porch Light Lit by EGG Batteries.
Photo by Eric Persha

This group of students built an organization that rents out rechargeable batteries (think Netflix for batteries). In 2009, they were awarded money from the IDEAS Competition to pursue their idea and earlier this year, Jamie Yang was awarded an Echoing Green Fellowship. EGG-Energy is now supplying over 300 customers in Tanzania with regular access to energy. We caught up with their team earlier this week on where they’re headed:

How did winning an IDEAS competition help you in starting EGG-energy?

One of the largest barriers to innovation and actually implementing new ideas is the lack of funding offered to groups that are still ‘figuring things out’. The money received by IDEAS helped pay for the EGG trip to Tanzania in which we started our pilot project. During this particular trip, we were able to identify a village that would be a good starting point of our operations and we now have over 300 customers.

You have traveled a lot to Tanzania. Do you remember the first time you brought EGG-energy to Tanzania? How did it compare with or challenge your business expectations and research?

We installed our first customers in August of 2009 in Mvuti, some 25 miles outside of Dar es Salaam. The event raised a lot of interest with dozens of people gathering around to see us do the installations for the few selected pilot customers. Probably two biggest surprises were first, how much interest there were for the service but how much the different needs varied. We heard requests from powering TV’s to security lighting from the very first day. Second, how far the reach of the community and village leadership go into the business, from approving locations to customer recommendations.

You’ve been working together for two years now. How have your business strategies evolved as you’ve grown? What skills have you honed since the beginning?

We took one year to work on our business plan and raise funds. Now we’ve operated our pilot for a year now. One of the biggest lessons learned is that we couldn’t rely solely on word of mouth to get the word out about our service. We waited for about 3 months and noticed that customer acquisition was slow. Therefore we implemented a more aggressive sales strategy that included having a sales force to visit the community with demo kits to explain the value of EGG’s service. We then paid the salesmen commission for the new customers they acquired for EGG.

We’ve also had to individually step out of our comfort zones. We’ve had to learn how to draft legal documents, operate a board of directors, manage Tanzanian employees, understand stocks and options, become experts at accounting, and much more. Many of us thought we’d never have to do many of the tasks that we’ve engaged in while working with EGG.

What resources have you found and relationships have you built that were essential to EGG’s growth? Are you working with any local, Tanzanian organizations? What sort of research did you do to show there was a market for EGG?

EGG has partnered with IB Energy, LTD., a Tanzanian energy service provider. They have offered us advice on dealing with Tanzanian team members, provided translation and mediation services, assisted us in the hiring process and also on site identification. IB Energy is very familiar with and active within the energy realm in Tanzania – they are sometimes called upon by the government and the Rural Energy Agency to assist in rural electrification projects. Without their advice and guidance, we believe that our team would’ve faced additional challenges and it would’ve taken much longer to achieve what we have thus far.

In terms of research, we explored existing literature and studies on the electric power sector and energy consumption in Tanzania. Subsequently one of our team members traveled to Tanzania to perform informal surveys and interviews to assess the need for EGG services and the ability to pay for such service.

EGG seems to be growing at a steady pace. At some point in your growth, you hired six local, Tanzanian employees. How did your business change at that point? What is it like to manage people halfway across the world?

Battery Swap in Tanzania

Battery Swap in Tanzania. Photo by Eric Persha

Having the six local employees was a relief because we needed help running our charging station and performing home installations. Once we implemented the new sales strategy, the demand for our service grew quickly to a point that we couldn’t manage without the 6 extra workers.

Additionally, we have a very hardworking EGG-CEO, Jamie Yang, that manages the employees with the help of a operations director, Micah. The biggest barrier is language. If EGG can learn and better understand the language of its customers, EGG will be much better off.

Where to next?

We have a lot on our plate, currently. Ensuring our scalability and sustainability is a major focus for us. We need a new operations director before expanding into new countries and even new regions within Tanzania. We hope to have a handful of charging stations by the end of 2011 with even more distribution stations (we currently have 4 distribution stations with one central charging station). This will necessitate the hiring of at least 5 employees per charging station.

For the next generation of entrepreneurs, what three words of wisdom would you give.

communicate, organize, persist

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You can follow along with the EGG-energy team at their blog. And thanks to Eric Persha for the photos.

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