Powering up Southern Africa’s off-grid homes
SolarWorks! offers solar home systems and energy services on a pay-as-you-go basis to customers in Mozambique and Malawi. The company that nowadays provides jobs to hundreds of people started from Johannesburg in 2009, where co-founder Arnoud de Vroomen had moved to from the Netherlands with solar pico products for Southern Africa’s off-grid markets. What began with small appliances grew into large-scale energy services with the rise of the PAYG model. Today, SolarWorks! supplies a wide range of solar home systems – from small systems that include lights and mobile-charging capacity to bigger ones that power televisions, refrigerators, and sewing machines. Customers pay small amounts every month using mobile money until eventually owning the appliance.
Solar home systems can be an easy solution to power up off-grid households, with all connected benefits: for instance, electric light helps children do schoolwork and can reduce respiratory diseases where it replaces candles and kerosene lamps. “The moment you offer a small solar home system to a family to switch on the light, that is in the end still the most exciting point and for most people who work for us the reason to do it”, says CEO Arnoud de Vroomen. But access to energy also brings along opportunities for small businesses, generating income for families and boosting the local economy. And so does SolarWorks!: 95% of the employees are from Mozambique and Malawi, and the company is on its way to a gender-balanced workforce with 43% female employees in 2020.
When SolarWorks! decided to change its business model from pico solar in Southern Africa to a fully-fledged energy service provider in Mozambique, one of the partners who assisted the company along the way was the GET.invest Finance Catalyst, building on support provided by the Energising Development programme. GET.invest’s advisors gave hands-on advice on the financial model and business plan, ensuring these key documents were sound and met the expectations of potential financiers. The advisors also brought SolarWorks! together with similar energy service providers and financiers to discuss the business idea and bring their experience to the investor pitch.
SolarWorks! have come a long way since then, from a first mover position in Mozambique’s market for solar home systems to a business expansion into neighbouring Malawi. In 2019, the company scaled up with an amount equivalent to €3.5 million debt funding from the European Union’s impact investor ElectriFI; the first large debt facility for an off-grid company in Mozambique at the time.
While business in both countries is headed for further growth, the company has entered into the next stage with the Finance Catalyst once again on board as a trusted advisor. The focus is now on long-term strategic advice for future expansion, including how to better align the funding strategy with the future revenue model. Tasks ahead include the restructuring of short term debts and aligning repayments to the revenue model, as well as the ringfencing of receivables to provide security to future lenders. This involves the use of state-of-the-art cloud-based credit data processing and risk management platforms, allowing lenders to track financial health of their ring-fenced assets.
SolarWorks! has set itself the goal of becoming the number 1 off-grid energy supplier in Southern Africa. Future plans cover both new services and expansion into two additional countries in the region. The financing provided by ElectriFI in 2019 will enable the company to equip more than 100,000 households with solar home systems by 2021. While the impact on families’ lives is already strong, the company intends to focus more on small businesses through productive energy use, such as solar irrigation systems to boost the local economy.
The evolution of SolarWorks! from a pico to a larger provider of solar energy services shows that solar home systems, in combination with PAYG, has become an attractive and viable model for hundreds of thousands of new users, and is beginning to make a real impact in productive use thanks to progress in low-consumption devices.
Disclaimer: Support to the company is ongoing as of 06-2021. Projected results are subject to change.