Enterprise

Varsity don banks on large solar panels to beat stiff competition

solar

SunnyMoney co-partner Ceasar Mwangi during the interview at the firm’s offices in Nairobi last week. PHOTO | DIANA NGILA

Caesar Mwangi’s business is at a point where most entrepreneurs fret about — change of strategy.

The former managing director of listed firm Sasini is tweaking the business model of a solar energy firm that he and his partner acquired from British investors last year.

The foreign investors offloaded the solar energy company, SunnyMoney, after struggling to gain a foothold in the region in the face of cut-throat competition from a flood of cheaper Chinese kits and local suppliers such as M-KOPA.

“We are moving from supply of small solar devices to larger ones since after light, homes want some form of entertainment and information,” said the 51-year old management consultant at his office on Ndemi Road, off-Ngong Road in Nairobi.

Dr Mwangi is also in talks with several microfinance institutions to unveil a flexible financing product to spark increased uptake of the solar kits by low-income households.

The father of five remains cautiously optimistic that product differentiation would lead the company to a blue ocean opportunity with more returns, at a time when the Kenyan market is teeming with dozens of suppliers.

SunnyMoney was founded in 2008 and initially supplied single-light devices dubbed Pico to rural homes not connected to the power grid at a cost of Sh1,000.

Business initially took off, but soon after tapered off as the Chinese supplier, Delight Solar, got wind of the roaring business in the region and started direct distribution of the kits to East Africa. “The manufacturer-now-turned competitor really cannibalised our business,” said Dr Mwangi, who is also a former African regional director at UK-based Global Village Energy Partnership (GVEP).

Feeling outmuscled and outsmarted, the British investors enlisted his consultancy services in a bid to revamp the ailing firm.

This saw the firm diversify into larger solar panels of up to 6.5 watts, enough to play a home sound system and light up three rooms.

A unit costs Sh8,000, payable over a period of one year using mobile phone money service with customers required to fork out Sh2,500 as initial deposit. 

Having been shortchanged by the Chinese manufacturer, the solar company turned to yet another Chinese company, Jua Energy with whom they seek to upscale the units.

The company is expecting a larger market share with the expected launch of larger capacity systems with entertainment electronics and commercial products that will see micro-financiers finance customers to make the purchase.

In June 2015, the investors handpicked Dr Mwangi as the CEO of SunnyMoney as they sought to tap into his vast experience and understanding of the local market.

But it was not until last year that Dr Mwangi, who is a part-time tutor at Strathmore Business School, teamed up with a colleague, Charles Kariuki, and bought out the company at an undisclosed fee.

They also got a Sh5 million soft loan from SolarAid — a global charity agency — to kick start their turnaround strategy.

Apart from homes, Dr Mwangi reckons that the company has established a database of more than 7,000 teachers in off-grid areas to install the kits.

“We have identified schools and teachers as our main target clients,” he says.

The company is currently working with 40 sales agents, mostly in western Kenya and Rift Valley regions but plans are afoot to spread reach to other areas.

It remains to be seen whether the quest to revamp its operations will yield dividends and hot up the red ocean market — where intense rivalry has fast become the order of the day, fuelled by State-backed incentives.

The Treasury removed valued added tax  and import duty on solar kits, making them cheaper to ship in and install, in efforts to woo investors. The incentive has pulled in companies like Indian Orb Energy, UK-based Azuri Technologies and German firm Mobisol whose pay-as-you-go concept allows homes to pay for the solar systems on mobile phone staggered over a period of up to three years.

Most of these systems come as a package comprising a TV set, solar panels, radio, phone charging system and lights. The largest capacity solar kit currently stands at 200 watts and is owned by Mobisol, enough to power refrigerator alongside other household devices.

Solar experts reckon that Kenya has a high potential given high radiation levels from the sun throughout the year.
The intensity of sunlight, not heat levels, determines solar electricity production.

Experts reckon that solar is Kenya’s low-hanging energy fruit with the solar systems offering the economy the shortest route to lighting areas not connected to the national power grid. This is crucial in improving welfare of the rural folk and triggering economic activity.

The Rural Electrification Authority plans to set up 100 small solar plants in off-grid towns, with the aim of lighting up the majority of homes this year.

Dr Mwangi, an avid hiker who most recently scaled Mt Kenya and Kilimanjaro, says he is an evangelist of optimal organisation performance and change management.

He traces his professional values to his academic path that took him to the University of Nairobi (degree in economics), University of Witwatersrand (MBA) and a PhD from the University of Johannesburg. He reckons that his next step, after revival of the energy firm, would be to venture into bio-fertiliser production given his passion for agriculture that saw him serve as managing director of agribusiness firm Sasini for five years.

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