Bringing the solar system home… and making it smarter
How BBOXX is bringing the “Internet of Things” to off-grid energy solutions
Bringing traditional electricity to every home is a massive undertaking in many parts of the world. Over 600 million people in Africa alone live in homes not connected to a grid. The Economist predicts that connecting all of these homes would require additional annual infrastructure investment of over $50 billion. Off-grid systems, particularly solar, have emerged over the past few years, growing rapidly as VC funding has responded to the development of both more cost-effective products (solar panel costs have dropped 80% since 2010, and more energy-efficient devices have been developed) and new business models that address some of the barriers profitability in the sector. [1]
BBOXX is one such business. It offers “SMART” solar power generators to individual households, promising customers an easy to install, reliable, and cost-effective way to power lights, fans, phone chargers, and even low-power TVs. Thus far, BBOXX has provided off-grid electricity to over 350,000 people across Sub-Saharan Africa and Southeast Asia[2], with a goal of reaching 20 million people (or 4 million units installed) by 2020.[3] BBOXX’s success and potential to scale is driven its operational decisions around developing and deploying SMART units.
The use of global SIM cards allows for easier logistics for the business as well as increased reliability for the customer. To enable the SMART technology, each unit is installed with a Vodafone machine-to-machine global SIM card that is connected to BBOXX’s global network. The SIM can work in low-network areas and can roam on whichever network is strongest in that area. This simplifies the logistics for BBOXX but also increases BBOXX’s reach, being able to reliably serve customers outside the range necessary for more data-intensive products. The SIMS are also preconfigured to block calls, texts, and data, reducing an incentive for someone to use it for other purposes.[4] Finally, using a single supplier of SIMs makes it easy for BBOXX to quickly expand into new markets, simplifying the integration of new geographic sources of data into its global system3 (at least, according to Vodafone, who may be slightly biased…).
The use of SMART technology allows for more reliable payment for the business as well as more manageable payment for the customer. A fundamental problem facing for-profit solar providers is managing customer payments. To illustrate, in Pakistan, a BBOXX system (including the control unit, battery, solar panel, tube light, and light bulb) costs $330.[5] Almost none of the target market can afford to pay this sum up-front, but the lack of credit history and remote nature of most customers make it challenging to extend credit and enforce collections.
Because all BBOXX units are enabled with two-way data transmission, the company is able to remotely shut off the unit if a payment is missed. Without this system, the customer could continue use until an agent personally arrived to turn off or retrieve the system. Once the customer had paid, there would be another wait for someone to show up to turn the device back on, reducing willingness to start paying again. Remote control has a substantial impact on repayment: BBOXX now has over 90% of payments made on time for its SMART systems, compared to 55% for its non-SMART systems.[6]
The use of SMART technology allows for decreased personnel costs as well as increased product value for the customer. Remote shut-off and shut-on is not the only way that SMART simultaneously reduces BBOXX’s personnel requirements and adds value for the customer. BBOXX also installs updates and checks for problems remotely.[3] Not only can BBOXX easily determine whether a customer-reported issue can be easily solved without an employee trip, the company can also run regular check-ups and proactively reach out to customers to solve a problem they may not have even reported yet.
SMART can enable so much more. BBOXX has started to think of the impact of SMART beyond improving its core product offering, but mostly as it relates to using data to attract potential investors. BBOXX is collecting enough data to build a detailed view of energy consumption that can be mapped by socio-economic status and geography as well as personal repayment histories, which could be used in the development of new products and features. Household repayment information could be invaluable to the growing credit scoring industry, hungry for this type of data on consumers with limited formal purchasing history. Finally, could the same SMART technology be deployed on completely unrelated items in a pure data-collection service (e.g., phones, other consumer electronics, etc.)?
The majority of the above suggestions may be far enough removed from BBOXX’s core competencies that it may not make sense for the company to undertake them itself, but there may still be substantial opportunity for partnership with others who could take advantage of the technology.
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[1] “Africa unplugged: small-scale solar power is surging ahead,” The Economist, October 29 2016, http://www.economist.com/news/middle-east-and-africa/21709297-small-scale-solar-power-surging-ahead-africa-unplugged.
[2] “BBOXX pursues its ambitious growth with successful $20 million fund raising,” PRNewswire, August 30 2016, http://www.prnewswire.com/news-releases/bboxx-pursues-its-ambitious-growth-with-successful-20-million-fund-raising-591708211.html.
[3] “BBOXX ensures reliable energy for remote communities worldwide,” Vodafone case study, April 2015.
[4] “Energy solutions for the developing world,” Wireless Logic, 2016, http://www.wirelesslogic.com/case_study/bboxx_remote_solar_/.
[5] “Mobile for development utilities: EcoEnergyFinance distribution of solar pay-as-you-go in Pakistan,” GSMA Mobile for Development Utilities, 2014, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/05/M4D-Utilities-EcoEnergyFinance-Distribution-of-Solar-Pay-as-you-go-in-Pakistan.pdf.
[6] “SMART Solar Case Study: Pay Plan Officer,” BBOXX, September 2015, http://www.bboxx.co.uk/smart-solar-case-study-pay-plan-officer/.
I really like the idea of using small scale solar energy as a way to provide electricity to homes in off-grid towns, primarily in developing countries. My primary concern is the large up-front cost. You mentioned that BBOXX can shut the system off if payments are missed, but that doesn’t answer the bigger issue of how they will generate any revenue if not up-front payments can be made in the first place. Is BBOXX doing anything to make these systems more accessible. Those in need of electricity are likely the same as those unable to pay the $330 upfront cost.
Another concern surrounds continued maintenance. I wonder if BBOXX provides any maintenance service, and if so how this is economically viable given the remote locations of many of the users. If not, I worry that the installations may fall into disrepair and may no longer be usable.
I would be curious if it is possible to have one larger system service a small village, or at least multiple households. This could reduce costs for every individual and also reduce the maintenance pressures for BBOXX.
Hi Molly,
Thanks so much for your comment. Re-reading my original post, I realize I didn’t make it clear that the appeal of BBOXX is that it’s auto shut-off, shut-on makes it easy for it *not* to require the customer to pay $330 upfront. In fact, the way it works is that a customer pays a monthly fee that is only $10-20, depending on what they’ve purchased. As a result, the product is much more affordable for the consumer and BBOXX increases its likelihood of getting paid I apologize that my post wasn’t clear on this!
Leah
Great article! I’ve been following the use of pay-as-you-go solar installations for a while. Seems like they offer a lot of promise for developing markets, such as those in Africa. Here’s an old article about another interesting player in the space: http://www.bbc.com/news/business-30805419
My major question here revolves around the defensibility of this market. In the traditional utilities space, the large up-front costs associated with transmission and distribution and the highly skilled workforce required act as strong barriers to entry and provide long-term stability for utility companies. In this model, since the inputs (solar panels, ancillary equipment, and labor) are completely commoditized and customers are free to discontinue service any given month, I’m curious as to how the market will shake out. Would love to get your thoughts here.
Thanks for sharing!
Hi Andrew,
I totally agree – we see a lot of other companies playing in this space today. I do think there is some first-mover advantage here, as a lot of distribution comes from word of mouth and community trust. However, it is even more localized than Uber’s network – so even if one company is doing great in one district, it may have little first-mover advantage in another district, let alone in another country. The other advantage of moving quickly at the beginning for these types of companies is the data they’re collecting, which they use to enhance their products and offer other services to particular areas. As long as that data is held privately, this is harder to replicate for someone coming in later.
Leah