Certain countries in Southeast Asia might have booming tech industries, but many people in the region still lack access to a stable supply of electricity. Many are still reliant on generators and candles to light their homes.
SolarHome, a Singapore-based startup, was founded in 2016 to meet the needs of these people, beginning with those in the rural areas of Myanmar. The company sells hardware that can harness power from the sun so that those who need it the most can adopt renewable energy.
KrASIA recently caught up with Greg Krasnov, the founder and chief executive officer of SolarHome, to find out more about the company’s activities and purpose.
KrASIA (Kr): How did SolarHome come about?
Greg Krasnov (G): With millions of people still dependent on archaic light sources like kerosene and candles in the rural parts of Southeast Asia, I decided to set up SolarHome in 2016, after being inspired by the Pay-As-You-Go (PAYG) solar model that originated in Africa.
I roped in Geert Jan Ten Hoonte, who is now the president and chief operating officer of SolarHome. By combining my experience in building a retail bank and Geert’s international retail and consumer finance expertise, we plan to empower the solar energy value chain to bring affordable solar lighting and appliances to millions of customers in the next few years, in Myanmar and beyond.
SolarHome provides its rural solar electrification kits to Myanmar households on a rent-to-own basis. More than just another clean energy source, this also presents new opportunities for education, income, and business growth for those at the bottom of the economic pyramid.
Kr: What made Myanmar the country to launch SolarHome’s PAYG solar product line and distribution network?
G: In Myanmar, over 70% of rural households still live outside the electric grid. They pay for kerosene or candles each month to get access to lighting. Additionally, a lack of existing PAYG distributors in Myanmar also meant that the competition level, at the moment, is still low.
Overall, we are seeking to substitute the legacy energy sources with solar energy in the country. It’s a market worth close to USD 500 million.
Kr: How has SolarHome’s growth been so far?
G: We have successfully rolled out five different products across multiple price points and now cover over 30,000 households, impacting over 150,000 lives in Myanmar.
As of now, we are focused on implementing industrial-level operational efficiency in the company’s processes for us to scale to more than one million customers in the next few years. We also hope to attain profitability and operational excellence across our 20 hubs in Myanmar.
The next step is to look at Indonesia, the Philippines, and Cambodia, where a further 20+ million households live off-grid.
Kr: How is SolarHome’s PAYG model different from off-grid, sustainable operations?
G: The PAYG model is unlike other off-grid models. Our pricing is comparable to what the customer is currently paying for kerosene or candles each month. This makes it very affordable and easy to adopt. At the same time, it enables the company to realize a good margin on the product that it sells, making its growth sustainable.
PAYG is one of the few segments within the renewables industry that offers strong, positive product-level profitability without the need for any government subsidies, offtake contract incentives, or donor support.
Kr: Do you see a growing market for venture debt in the region?
G: There is definitely an increasing demand for venture debt, while supply appears to be quite limited at the moment.
At SolarHome, we explore different types of funding, having raised over USD 10 million in debt, and over USD 6 million in equity from VCs, angel investors, and international crowdfunding platforms. The convertible debt we issued last year, for instance, has been converted into equity during our Series A round earlier this year.
It will be interesting to see how this develops as startups look beyond traditional VC funding.
Kr: How should aspiring social entrepreneurs balance profitability with driving social impact?
G: Driving social impact and profitability must be aligned for impact enterprises like SolarHome to thrive. While we seek to raise millions of rural households out of poverty through reliable and affordable solar energy, we also can’t survive without tending to our bottom line.
Achieving a fair rate of return for our investors is our number one priority that will, in turn, help to fund the investment required to bring more social, economic, and environmental impact to our customers.
This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in Southeast Asia.