📖 Key Takeaways
- SOLshare presents a rare match of impact and profitability; the solution creates a transformative experience for the rural end consumers while presenting a rather profitable business proposition for SOLshare itself
- The business is heavily reliant on the success of the SHS initiative by the Bangladeshi government, which provided the necessary excess supply of solar assets to enable the microgrids
- The founders dug deep and discovered that the essence of the problem lies in the lack of equitable distribution of excess energy, which is a much cheaper problem to solve than trying to install Solar Home Systems for all homeowners
📊 Company Facts
- Founded in 2015
- Headquartered in Dhaka, Bangladesh
- Raised $2.8M in funding (as of Dec 2020)
- Private-for-profit company
- Sebastian Groh, Managing Director
- 2013 Stanford Ignite Fellow from Stanford Graduate School of Business
- PhD from Aalborg University and the Postgraduate School Microenergy Systems at the TU Berlin; doctoral thesis on the role of energy in development processes, energy poverty & technical innovations, with a special focus on Bangladesh
- Published a book and multiple journal articles on the topic of decentralized electrification in the Global South
🛠️ Technological Context
- At its simplest, an energy grid can be formed with 1️⃣ generator, 2️⃣ transmission, and 3️⃣ end user
- In most conventional power grids, power generators are located a distance away from end users and the power transmitted to end users via long power lines
- Power transmission lines are costly to build and maintain, especially in rural areas
🧭 Market Situation
- Back in 2000, 68% of Bangladeshi population had no permanent access to electricity
- As part of the UN’s Millennium Development Goals, the Bangladeshi government set a target to provide electricity to all its citizens by 2020
- Off-grid renewable energy is selected as the best option to bring electricity to the rural areas, where 70% of the population lives
The Solar Home Systems (SHS) Initiative was launched in 2003, with over 4.12 million solar home systems installed in the country by May 2017
- As a side note, the SHS project also contributed to the local manufacturing industry; all components of the solar systems were produced locally and the renewable energy market employed 114,000 people in 2013 alone
- Not all users were able to participate in SHS as they couldn't even afford the subsidised costs
- During some parts of the day, there are up to 30% excess energy generated by the SHS
- There is a gap between the SHS owners with excess energy and the rest who needed more power but were unable to tap on the energy
SOLbazaar, a complete IoT (Internet-of-Things)-based solution that connects different users so that SHS owners are able to sell excess energy to those who need more energy
- SOLbox - Bi-directional DC electricity meter that enables peer-to-peer electricity trading, smart grid management, remote monitoring, mobile money payment and data analytics at the hardware level. The hardware devices enable the creation of a DC smart grid and integrate with existing solar hardware (such as the solar panels and batteries) to connect with other SOLboxes in nearby homes and businesses.
- SOLapp - Mobile app which manages customer portfolios by taking user information and payment details into account. It updates accordingly with user activities and energy consumption.
- SOLweb - Web-based platform that gathers and analyses all the information from SOLbox and SOLapp to understand system paradigms and irregularities.
🔧 Why It Matters
- SOLshare identified that the market gap for energy in the rural area lies is one of equitable distribution; excess energy was readily available (from the SHS owners) and can be sold, but there was no means to distribute the energy to those who need it more
- As such, rather than trying to subsidise the installation of SHS for those who do not yet own them, SOLshare focused on connecting SHS owners with non SHS owners via a relatively low cost solution
- By doing this, energy users who were previously unable to easily access or afford energy can now do so at a lower price point, while SHS owners can use their energy assets more efficiently and generate extra revenue
- SOLshare currently has 34 grids across Bangladesh, helping to lift 5,000 people out of energy poverty and saving 4970 kg CO2 per year
🤵 Main Users
Producers - Solar system asset owners are able to sell energy to both prosumers and consumers, allowing them to invest in additional solar assets if the financials work out
- Solar system asset owners and users who tend to generate excess electricity.
- They have the flexibility to make excess money by selling these excess energy in the P2P energy market.
- Users who do not own solar assets for some reasons.
- They are able to purchase energy from the producers and prosumers as needed with minimal upfront investment and cost.
✅ Company's Edge
In most marketplace models, it is important to build both the supply- and demand-side users.
- SOLshare’s platform allow solar owners to easily sell off excess energy without complicated processes or expensive equipment
- Energy sellers can decide when and how much energy to sell off, allowing them to manage their energy usage flexibly
- There is a ready pool of customers on SOLshare’s platform for these solar owners’ excess energy, leading to a ready and predictable source of revenue
- Result - Quick and easy buy-in from key partners as they can immediately see the value for themselves, allowing SOLshare to provide supply side users quickly in each remote grids
Good customer relationships are important to ensure customer retention and sustainable business.
- SOLshare's solutions essentially serve as critical infrastructure for their users
- For producers and prosumers, SOLshare serves as an additional source of revenue that they are otherwise unable to capture from their solar assets
- For consumers, SOLshare's solution is a low capex and opex method to acquire a ready energy supply
- Result - SOLshare's solution becomes ubiquitous and embedded into the users' everyday lives
Eco-Social Benefits - Beyond the users, a great social business should generate eco-social benefits and positive externalities in the community.
- SOLshare's solution is designed to work with solar energy, which encourages additional solar investments and discourages fossil fuel
- Affordable energy opens up opportunities for other aspects of sustainable development, such as better studying environment and reduced indoor air pollution for families
- A recent impact assessment estimates that every $972,000 invested in SOLshare generates $4.74 million in social capital among its current users
❗Areas of Improvement
Channels - It is important to have a suitable channel with the customers in order to communicate and reach the customer segments well
- SOLapp and SOLweb needs to be designed around the consumers, as they might not have the means to afford mobile phones and computers in order to run such programs
- SOLshare's activities seem to still be quite ad-hoc project based, which may be slowing down the roll out of the microgrids
- It is unclear what is SOLshare's support for the users post installation to ensure that the equipment is working as intended
Eco Social Costs - Being aware of potential eco social costs is important to prevent or mitigate such costs from materialising
- It is unclear what is the end of life management of the SOLbox devices, which comes into play when the devices are damaged or the products are no longer required
- Sourcing and supply chain of the SOLbox devices is also a major factor on how sustainable the product is
- This can be mitigated by working with the growing manufacturing industry in Bangladesh within the renewable energy space
🔮 Strengths, Weaknesses, Opportunities and Threats
- As microgrid systems like this get more common, there are opportunities to layer on other features and solutions to create greater impact (for eg. Internet/networking, microfinance, education). This will also help future-proof the business proposition and sustainability.
- The technological barrier to entry is relatively low, so we might see more of such businesses appearing in other parts of the world once the right market driver appears (for eg. a large number / financing available for solar home systems), representing a threat to SolShare.