Nuru Energy commits to scale its off-grid recharging platform, the Nuru Octupus Charger by adding 2000 village-level entrepreneurs (VLEs) in Rwanda, who sell 240,000 Nuru LED Lights to poor, rural households earning less than .50 per day. Nuru Energy, with partners, will also set up the micro-franchise fund that will provide capital to cover the upfront cost of VLE recharging equipment and lights.
The Nuru Energy recharging system can fully recharge five Nuru LED lights, each lasting approximately 1 week, or up to five other USB-charged devices, including mobile phones. The output required to achieve this is just 20 minutes of easy pedaling or direct sunlight,. Nuru Energy's products will go to market via micro-franchised, Village Level Energy Entrepreneurs (VLEs), who sell Nuru's LED lights and earn a sustainable income from recharging lights and mobile phones. VLEs are able to earn their previous daily income in just 20 minutes. Since 2012, Nuru Energy has set-up over 1200 VLEs and sold over 70,000 Nuru Lights to households earning less than .50 a day in East Africa.
As part of this scale-up, Nuru will amend its strategy. A demonstrated obstacle thus far has been that customers found it difficult to spend upfront to replace their existing kerosene lamp(s) with a Nuru Light. In order to overcome this barrier, Nuru Energy has restructured its pricing platform, lowering the price of the lights to .50 and recuperating the loss with recharging revenues.
The success of Nuru Energy's business model to date has been the ability to offer Nuru Lights at close to the delivered cost and then to earn profit through a portion of the recurring recharge revenue automatically from the VLEs via Nuru Energy's patent-pending energy credit/activation code system. Using the local mobile money network (currently MTN Money in Rwanda and Uganda, MPesa in Kenya), VLEs purchase 'energy credits' or 'activation codes' (.10 US per energy credit), which are automatically generated by Nuru Energy's cloud-based server and sent to the VLE via SMS. Once the codes are entered into the Octopus Charger keypad, the Octopus is 'topped-up' and will recharge as many lights and mobile phones as per the 'top-up' purchased. This gives Nuru Energy recurring revenue and eliminates the need to depend on the upfront margin from product sales, the way other rural lighting companies do.
This unique payment system gives Nuru Energy the ability to offer the recharging equipment to VLEs and Nuru Lights to households at a dramatically discounted price. Through the activation code system, the upfront loss on equipment can be recovered quickly.
The micro-franchise fund will earn a return through a portion of the recharge revenue that Nuru automatically recovers from VLEs via the local mobile money network. Institutions investing in this fund will receive a login into Nuru's cloud-based software and will have the ability to track, in real-time, the progress of their VLEs and of their investment.
This commitment is strongly in line with Nuru Energy's overall mission to dramatically reduce the use of illumination kerosene in developing countries and to provide a highly replicable and scalable low-power energy solution specifically for poor, rural households earning less than .50 per day.
Q4 2014 - 300 VLEs set up; 36,000 Nuru Lights distributed
Q1 2015 - 400 VLEs set up; 48,000 Nuru Lights distributed
Q2 2015 - 500 VLEs set up; 60,000 Nuru Lights distributed; microfranchise fund set-up and funded
Q3 2015 - 750 VLEs set up; 90,000 Nuru Lights distributed
Q4 2015 - 1,000 VLEs set up; 120,000 Nuru Lights distributed
Q1 2016 - 1,250 VLEs set up; 150,000 Nuru Lights distributed
Q2 2016 - 1,500 VLEs set up; 180,000 Nuru Lights distributed
Q3 2016 - 1,750 VLEs set up; 210,000 Nuru Lights distributed
Q4 2016 - 2,000 VLEs set up; 240,000 Nuru Lights distributed
It is no coincidence that the two billion people in the world who have no access to modern electricity are the same two billion people who are below the poverty line, earning less than .50 per day. Having access to energy is a pre-requisite for economic development; populations with the highest rates of electrification have the lowest rates of poverty. Much emphasis is placed on extending the electricity grid or implementing large-scale off-grid energy solutions, when in fact the energy needs of most developing country rural populations are basic. They need energy primarily for task lighting, mobile phone charging, and radio.
For lighting, the rural poor currently rely on kerosene. Kerosene is a polluting, unhealthy, and unsafe lighting source, but it is widely used because it has a low upfront cost (about for a tin lamp) and can be purchased in small increments as low as a few cents per day, which is attractive given meager and erratic income streams. In Africa in particular, the rural poor spend up to 10% of their income on kerosene, which amounts to billion per year (World Bank). With such a high percentage of income spent on a dirty fuel source, poor families remain poor, unable to save money and reinvest in health, education, or nutrition.
In order to break the cycle of poverty, there is a dire need to provide affordable, clean, safe, and functional low-power energy solutions to rural households that are unconnected to the electricity grid.