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Solar Service Concept by Michael Iyanro

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Pitch

Solar Service Concept will empower the world’s underdeveloped communities through the application of solar and wind energy technologies.


Description

Summary

 

The mission of the Solar Service Concept  is to conduct aggressive development and deployment of solar energy technologies and systems to make it an attractive option for everyone.

We will offer a new approach to solar and back-up systems by introducing the Solar Service Concept (SSC). The SSC first concept is a low-cost passive solar panel rotating tracker that will optimize output by up to 40% through tilting the panel perpendicular to the sun. It is a simple mechanism that will use bamboo (or metal when used industrially), recyclable metal strips and the physical imbalance of the panel itself. Because of its basic assembly, the SSC will require less maintenance than a traditional tracking system and will not use electricity as a motorized one would. The concept will consist of four main components that offers stable, uninterrupted power at an affordable cost by making solar, a back-up system. The solar panel harnesses photon energy from the sun, converting radiation into electricity. This electricity is then conditioned by a charge controller before it is sent to a battery for storage. The charge controller regulates the battery’s state of charge, preventing it from being damaged. The appliance, then, receives its power directly from the battery. SSC solar concentrators will allow people to cook conveniently with the sun by maximizing ergonomics, temperature adjustability, portability, and durability. Nevertheless, SSC’s solar electric systems will be sold as pre-assembled kits. Because customers will be expected to perform their own installations,

With this we will make solar-and back-up systems accessible for people and institutions. West Africa counts over 250 million people and thousands of schools and health centers. We plan to provide 15% of these with an installation in the first 3 years requiring a total investment capital of U$ 1M breaking even after 4 years.

 

 


Category of the action

Reducing emissions from electric power sector.


What actions do you propose?

 

Company Overview. Solar Service Concept will empower the world’s underdeveloped communities through the application of solar and wind energy technologies. The company will become the world’s leading provider of renewable energy (RE) products and services, with projects potentially spanning all seven continents, by 2020.

Industry & Marketplace Analysis. One third of the world’s population has no electricity. The majority of these people live in rural, remote areas of the world’s poorest nations. Global development is a multi-billion dollar industry, with the World Bank providing huge sums of money to fund large-scale projects. In the past ten years, global electricity demand has grown by 40%. During this time, the use of RE has expanded at ten times the rate of fossil fuels. Experts predict that the world’s electricity demand could triple by 2020, a colossal increase that will be fuelled by the industrialization of developing countries. As a specialty provider and integrator of RE systems designed for developing communities, Solar Service Concept will position itself to capitalize on this explosive trend. Solar Service Concept will establish its first project in Abeokuta, Nigeria, which lies near the south-western shore, deep in sub-Saharan Africa.

Products & Services. SSC will immediately specialize in providing electricity and electric services for rural communities, and will utilize two different business strategies to distribute power. First, SSC will sell solar electric systems (SEE SUMMARY) for home and commercial applications by allowing customers to finance the cost of these systems over time. Second, the company will offer end-user services direct to customers by establishing electrified community centers in the heart of their villages. At these centers, people will be able to purchase services ranging from crop processing to refrigeration to telecommunications access to internet browsing. The SSC first concept or design is a low-cost passive solar panel rotating tracker that will optimize output by up to 40% through tilting the panel perpendicular to the sun. It is a simple mechanism that will use bamboo (or metal when used industrially), recyclable metal strips and the physical imbalance of the panel itself. Because of its basic assembly, the SSC will require less maintenance than a traditional tracking system and will not use electricity as a motorized one would.

SSC’s solar electric systems will be sized to meet the needs of a typical African household. Very few African homes have the need to power anything more extravagant than a few fluorescent lights and a radio, and therefore these systems will be small by western standards. Each system will come with a solar panel, a deep-cycle battery, a charge controller, lights, a radio, wiring, connectors, and mounting materials. In order to serve the expected high demand for affordable solar electric systems in Africa, all systems will be sold as pre-assembled kits. These kits will be designed to be so simple that end-users will be able to perform the installations themselves. In this way, SSC will minimize the size of its technical staff. Initially, there will be three kit sizes offered. Table 1 presents a spec and price comparison of SSC’s introductory product line. For homes or businesses requiring more power, customized systems will also be available. Furthermore, as the community becomes more prosperous, people will develop more extravagant tastes for electric appliances and equipment, such as television sets, satellite dish receivers, refrigerators, and computers. SSC will continuously readjust this product line according to customers’ power needs. In addition, attractive trade-in and scale-up plans will be offered to customers in subsequent years, so that smaller systems can be traded in and up-graded to larger ones.

Table 1. SSC's Initial Product Line

Kit        Size         Components       Price/Month     Price/Year             Gross Margin

1          13 watts    1 light, 1 radio     $24.00                $288.00                      72.46%

2          30 watts    2 lights, 1 radio   $48.00                $576.00                      80.00%

3          48 watts    3 lights, 1 radio   $72.00                 $864.00                      94.59%

 

 

Solar Service Concept will first start with Abeokuta Nigeria by offering attractive financing options for solar electric systems. This will enable families to make purchases in small monthly installments, in the same way that a consumer would buy an automobile in the United States. In addition, Solar Service Concept will construct a 15,000-wattsolar/wind power station and community center, where services such as electric coffee processing, water pumping, refrigeration, computing, telecommunications access, and Internet browsing will be sold. This community center will also serve as a nucleus of education, where Abeokuta residents will be exposed to a contagious spirit of entrepreneurship. The services provided here will enable, motivate, and educate people to start new businesses. In this way, Solar Service Concept’s presence in Abeokuta will substantially boost the region’s economic prosperity.

Marketing Strategy. Abeokuta is a dispersed farming community of 350,000 people. The area is so remote that power lines may never be extended there, and only 2% of the population has electricity. Solar Service Concept’s target customer is an Abeokuta family that earns about $700 per year. A basic solar electric system will be priced at $288, or $24 per month. Market research conducted in Abeokuta strongly suggests that this price is feasible, despite the fact that it represents 45% of a typical family’s annual income. Currently, Abeokuta families use crude and dangerous kerosene lamps to light their homes, and expensive dry-cell batteries to power their radios. A solar electric system is safer, more reliable, provides better lighting, and promises better value than the alternatives mentioned above. Construction of the power station and community center will advertise Solar Service Concept’s dedication to a sustainable, long-term presence within the community. Solar Service Concept has partnered with a local company called the Ogun Solar Electronics Workshop (OSEW). Working with OSEW, Solar Service Concept will sponsor informational forums to educate customers about the economic benefits of financing, the technology behind solar electricity, and the use of electricity in cultivating a prosperous economy.

Operations and Development. In December 2013, Solar Service Concept will begin building the power station and community center. An expert in the RE field will be recruited to design this station, and to oversee its construction. OSEW will run all operations of the business in Abeokuta, including inventory handling, payment collection, product distribution, and maintenance repair. All power systems will be sold to customers as pre-packaged kits, assembled by OSEW employees.

Stage of Development Although fifty years of market exposure have proven RE technologies to be unequivocally reliable and durable, the commercial RE industry is still in its infancy, and the electricity markets in developing parts of the world remain almost completely untapped. A business solution is needed to meet the challenge of profitably selling this expensive, high technology equipment to people with meager incomes. In the past five years, a number of strategies have been implemented in rural, developing markets with astounding success. Almost all of these models have extended a microcredit or financing option to their customers. These successful companies have proven the efficacy of the business model that SSC will apply in Africa.

Competitor Analysis

Competing Technologies. Because solar electric systems are so expensive in Africa, they are viewed as luxury items. Almost every family would love to have one, but affordability is a preventative issue. As such, people must use more conventional methods of lighting their homes. Kerosene and dry cell batteries are readily available in Africa, but neither item is particularly cheap. Kerosene sells for about fifty cents per liter, and a typical family uses four to six liters per month; many organizations, such as schools and health clinics, use twenty to fifty liters per month. Dry cell batteries retail for about $3.00, and may last two or three weeks at the rate most families use their radios. Some families also own gasoline gensets, while still others own automobile batteries, which they charge with gensets, or at a grid station in the central part of the village. SSC’s chief competition in Africa is certainly kerosene and disposable batteries, and solar has several advantages over them. First, kerosene lamps are crude and dangerous; it is easy to find an adult in Africa who has been burned, at some point in his or her life, by a kerosene lamp leaking, spilling, or completely exploding. Furthermore, kerosene lamps provide lighting that is only somewhat better than a large candle, and they tend to be noisy and smelly during operation. Dry cell batteries are expensive because they must be replaced so frequently, and their disposal poses a serious environmental threat. Also, many appliances cannot be powered with batteries. A solar electric system, on the other hand, is clean and safe, and provides the familiar fluorescent, white light that can illuminate an entire room. Furthermore, a solar electric system can be used to power any electric appliance. It offers modularity, flexibility, and expandability, so that one single power source can be used for the house’s every electrical need. Additionally, these systems are extremely reliable, and require only minimal maintenance on, and periodic replacement of, the battery. If well maintained, a solar electric system will last for thirty years. Solar electric systems are more expensive than conventional alternatives in the short-term, but in the long run provide a far superior value for the money.

Competing Service Providers. Aside from SSC, there are no businesses or organizations providing solar electricity in Abeokuta. Furthermore, there is not a single organization in all of south-western Nigeria that offers financing for solar electric systems. The national utility, the Power Holding Company (PHCN), has no intention of expanding the utility grid into the periphery of rural areas for at least ten years.

Furthermore, this company has no understanding of solar electricity, and maintains only a minimal presence. PHCN is not equipped to effectively compete in this marketplace.

Summary of Financials and Offering to Investors. In Africa, solar kit financing will generate almost $800,000 of net income, and $2.7 million in accumulated cash, by 2019. Solar Service Concept will seek $1 million in a single round of seed financing to fund the construction of the power station and community center. Solar Service Concept will seek this capital from private accredited investors, non-profit relief agencies, or possibly as a partnership with a global technology company interested in penetrating emerging markets. Solar Service Concept’s presence in Abeokuta will drastically improve the community’s prosperity, thereby building real demand for electronics and telecommunications products and services. In exchange for capital and strategic support, Solar Service Concept will offer investor equity, and will additionally offer a partner company direct, unlimited access to these markets at the grass-roots level. Solar Service Concept is dedicated to improving the lives of the world’s underprivileged people by promoting the use of clean renewable energy. Therefore, Solar Service Concept also offers investors association with this noble initiative.

 


Who will take these actions?

 

Solar Service Concept’s principal founders, Michael Iyanro and Abigail Alabi Michael, will control the majority of the company’s equity. Solar Service Concept will employ both Mr. Michael and Ms. Alabi on a full-time basis. A Board of Directors will be assembled if and when investors demand one. A Board of Advisers has been compiled in the meanwhile. This Board is composed of experts with extensive experience relevant to the area of international rural development. All of these advisers have agreed to lend their assistance free of charge.

SCALE-UP

SSC plans to scale up the number of  its products in the market  across the developing world over the next 3 years. Strengthening our project is largely a function of the external partnerships we will put into place as well as how our internal team will expand to achieve our annual scale-up goals.

1. We plan to scale-up across 36 states in Nigeria,

2. SSC  will enhance the portfolio of products and services made available by introducing complementary products and services such as mobile phone recharging, fast-recharging radios, portable fans as and other lighting products.

In addition, we will identify, select and train rural village-level entrepreneurs (VLEs), each of whom will be provided with a start-up kit. Our Microfinance (MFI) partnerswill help to pre-identify pools of potential VLEs as well as finance those selected. SSC will typically select VLEs based on its own stringent criteria. Furthermore, we will train VLE’s in the following: 1. Accounting. 2. Rural marketing techniques. 3. Maintaining sales/service records such as invoices and warranties. 4. Basic technical training for any breakdowns and repairs.

3. By building a vast network of trained SSC entreprenuer, we plan to partner with external organizations to introduce other development-oriented products and services through the same distribution channel (e.g. malaria nets, clean cook stoves, etc).

 


Where will these actions be taken?

 

The project launch will begin from Abeokuta Nigeria. Abeokuta is a community in the south-western corner of Nigeria, at a geographic position of two degrees south latitude. The region experiences two dependable rainy seasons per year, and receives an annual average of about five peak sun hours per day, roughly 10% more than Denver, Colorado. About 350,000 people, or 60,000 households, live in this region, which is situated on a wide, sloping ridge at an elevation of 1,650 meters (5,400 feet) above sea level. The prominence of this ridge above the surrounding plain leaves it exposed to the tropical trade winds, which consistently blow from the west. There are few regions in the world that boast such abundant RE natural resources. Almost every household in Abeokuta is surrounded by a plantation of several hectares, and coffee is the community’s chief cash crop. The average yearly income is about $700 per family, and, though this is strikingly poor by western standards, Abeokuta is one of Nigeria’s most prosperous rural communities.

 

 


How much will emissions be reduced or sequestered vs. business as usual levels?

 

We anticipate 95% reduction in the emission level in this region once we are able to introduce RE systems to majority of the households. Our products will enable a lifestyle that is not only convenient and accessible, but also in harmony with people and nature. SSC will allow people to cook conveniently with the sun by maximizing ergonomics, temperature adjustability, portability, and durability. SSC will provide users with more reliable options for electricity generation, home heating, water purification, hot showers, and cooking at nighttime. With the pricing strategy that SSC has adopted, Abeokuta consumers will pay less than half of what a comparable solar electric system would cost from a typical African retailer.

 

 


What are other key benefits?

I

In one hour, enough sunlight reaches the earth to meet the energy needs of every person on the planet for one year. The promise of solar energy is no longer a thing of the future, it is here and now. Our goal is to bring this clean, abundant and renewable source of energy home to you. With the SSC, the 65,000-panel solar fields in California could generate 40% more electricity to sell to the grid and this is applicable anywhere in the world. This would increase the value of solar energy in the renewable energy market and help to reduce CO2 emissions. A family in rural Nigeria could power one additional lightbulb in their hut at night since the SSC is more affordable than a traditional $600 motor. If many panels harness 40% more energy consistently, then 40% more of the community can benefit from the electricity. For emerging markets, this will eliminate the need for kerosene lanterns, and encouraging communities to pursue sustainable development.


What are the proposal’s costs?

 

Mr. Michael has already invested $3,000 in administrative, travel, and research expenses to write a business plan. In the near future, SSC will require an additional $2,000 to $5,000 for incorporation and legal expenses, plus $1million in seed venture financing to launch the project in Abeokuta.

Itemization of Investment Needed

Power Station

5,000 Watt Solar Array 50,000

10,000 Watt Wind Generator 50,000

Power Conditioning Equipment 50,000

Power Storage Equipment 50,000

Security Equipment 10,000

Wiring and Connectors 10,000

Labor 30,000

Total Cost of Power Station $250,000

Community Center

Coffee and Fruit Processors 175,000

Refrigeration & Freezing Equipment 80,000

Computing and Telecommunications Center 100,000

Water Pumping Facility 60,000

Convention Center and Theatre 25,000

Battery Charging Station 20,000

2 Work Vans 20,000

Workshops 15,000

Office Space 5,000

Furniture 5,000

Security Equipment 5,000

Labor 40,000

Total Cost of Community Center $550,000

Total

Power Station 250,000

Community Center 550,000

Cash for Operations 200,000

Total Venture Round B Investment $1,000,000

 


Time line

 

Project Abeokuta will be launched in five major phases, during the following estimated dates:

Phase 1 Incorporation: Finalize business plan, incorporate, file with the SEC, build project website: January—March, 2014

Phase 2 Venture Financing: $1 million for construction of power station & community center, and to jump-start operations: February—September, 2014

Phase 3 Construction of power station & community center: October—December, 2014

Phase 4 Optimize solar kit packaging and assembly: November, 2014

Phase 5 Subscribe customers to solar kit financing plans: December, 2014

 


Related proposals

 N/A


References

 

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