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Challenge Cup

Winner Spotlight: PowerGen is a Micro-Utility Company Getting Kenyans Onto the Grid

Dena Levitz Headshot

Dena Levitz

Challenge Cup Reporting Fellow, 1776

Across sub-Saharan African, 600 million residents lack electricity. At night these off-grid homes often rely on lanterns just to have light of any kind. Rather than making energy kits available to these in-need customers, PowerGen Renewable Energy gives them electricity. The Kenya-based startup, which rebranded from WindGen Power in 2013, is a micro-utility power company that helps East Africans get on the grid. So far, PowerGen is generating $10,000 in monthly revenue and has 9 microgrids up and running in Kenya.

The company also emerged as the energy winner at Challenge Cup’s Nairobi stop last week. Following the competition, Eve Meyer, business development manager of the startup who pitched at Challenge Cup, explained PowerGen’s beginnings and future aspirations.

Within the realm of renewable energy, what exactly is the problem PowerGen is aiming to solve?

We’re specifically trying to address this idea that if Africans or those in the developing world need electricity, let’s truly give them electricity. Don’t give them a product. Don’t give them a lantern. Don’t give them a model or a service. Give them what they want: an outlet in their house, a light switch and the ability to use AC power as they really want.

Explain the customers you’re trying to give power to. Are they on the grid, off the grid or somewhere else on the spectrum, as you talked about in your pitch?

Primarily we target any customer who’s not connected to the grid. So you could be 1500 kilometers away. You could be within a few kilometers. If you don’t currently have electricity in your house or your business, you could be the beneficiary of our microgrid—the reason being that the national utility has a connectivity problem where it’s very expensive for them to be agile and mobile to get out to these peripheral communities. There’s been an opportunity to connect people; it just hasn’t happened yet. It’s off grid, but it can be some more urban-type areas too.

If I’m a customer, what do I get and pay for with the microgrid?

We definitely wanted to leverage things that Africans are very familiar with, and a mobile phone, a mobile network definitely comes up. The idea is to replicate something they’re familiar with, so not only is the mobile phone your access to your credit, your account balance, it actually works like mobile phone credit does. Most Kenyans pre-pay for energy use. When it runs out, their phone cuts out. Same with our energy. When you run out of credit, your power’s going to turn off.

We also allow people to buy bundles, replicating the way phone credit is sold. From a  consumer standpoint it’s just finding other services with mobile money that you’re allowed  prepay for … they can just intuitively use it. We only spend 10 minutes training the customer, and it’s not a new technology for them. It’s just their cell phone to interact with the system.

You mentioned you have a good relationship with KPLC, the Kenyan power company. What’s the dynamic between them, the established energy player, and your startup as the new player doing something a bit different?

I think right now it’s an interesting private-sector model for electrification. You need to understand the players in the market. We know the renewable energy players, the energy regulatory committee. In Tanzania we’re working directly with the rural electrification agency to do grids, so it kind of goes country to country and depends on the market. But it’s very important that we’re all in this together. We don’t see anyone as a bad competitor. We see an addressable market.

So for us it’s more working as a team and addressing our own sector. The people we’re targeting are not being targeted by KPLC. They’re lower energy users, They’re not factories. They’re mom-and-pop hair salons, restaurants, guest houses, just homes. I mean, they need electricity and that’s what our target market is.

As far as team, originally you were collectively working on wind turbines and then switched your focus. How did that happen?

I think being on the ground you get to see the market change as you’re here and operating. My partners, they came here in 2011 and had his really innovative idea to manufacture small-scale wind turbines for the market. It worked well. We got some traction. But really, over time, we found that the economics changed. The price of solar fell. Wind turbines were getting more expensive compared to solar.

Here, the company does renewable-energy projects. For us the generation (of the energy) isn’t all that important. We could do turbine-powered microgrids. But the cost of generating electricity from solar happens to be cheaper and easier to maintain, so we chose solar. But we think the more innovative part of the model is downstream—after and how you are interfacing with the customer, how you are packaging electricity, what service are you giving them. So that’s where we realized our expertise does help with the power systems and brings down the cost. The pivot we made is how you actually supply the end user.

Between now and Challenge Festival in May, what are the major activities for PowerGen?

I think we’re going to focus on the additional projects we have in the pipeline and continuing to serve our existing customers. That’s been a focus of ours this year. We want to get some more engagement. We think this is a model that will truly scale, not only in Africa but in other developing countries, and we want to scale up in a pretty aggressive way. So we’ll be doing a lot with financial plans and making these investor-partner relations so that when we get to D.C. we can take advantage.

And then for me, personally, I think all of the other companies part of Challenge Cup are going to help empower me. They have all of these great ideas for their markets and I’m so excited to meet the other energy companies. I think we can all learn a lot from each other. I think it’ll strengthen our business model here in Kenya and Africa.

 

 

Dena Levitz Headshot

Dena Levitz

Challenge Cup Reporting Fellow, 1776

Dena Levitz is traveling to almost all of the Challenge Cup cities to cover the competition and analyze startup ecosystems around the globe. Dena joins 1776 after finishing the first…

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