Rafiki Power and E.ON: Mini-grids for improved livelihoods in Tanzania

Wednesday March 22nd, 2017 - Smart Villages

Interview with Daniel Becker

Managing Director, E.ON Off Grid Solutions and Founder, Rafiki Power

Location: Tanzania

Daniel Becker is the Managing Director of E.ON Off Grid Solutions and founder of its Tanzanian brand, Rafiki Power, which focuses on mini-grids for productive uses of energy. For a look at how Rafiki Power operates, watch their short company video here: https://youtu.be/DlkNYZeqoqk

Daniel Becker started his career in finance and investments, working for PriceWaterhouseCoopers before joining the German-based energy company E.ON in 2011, where he focused on large-scale wind and biomass projects. In 2013 E.ON began an incubation program that encouraged employees to bring forward new ideas that could be tried and worked out internally. Becker was troubled by the fact that many socially conscious ventures were unable to reach scale, and realized that what was needed was a good business model.

Becker says that he is drawn to challenges, and in addition to being a strong believer in renewable power, he is also intellectually interested in figuring out how green electricity should work. ‘Power needs to be green’, he says, or ‘we will have a polluted world and millions in poverty’. But initiatives can’t be scaled up, if the finances don’t work. To educate himself on the needs of remote villages, he spent eight months in five African countries (including Tanzania) studying people’s energy needs and the local markets. In April 2014, he started a new business focused on supporting rural enterprises by providing electricity through mini-grids, as they can provide enough power to supply micro-industries, thus allowing people to generate income. The stability of mini-grid electricity would allow for many micro-industries to flourish, powering drills, circular saws, mills, freezers, poultry incubators, water pumps, milk processing equipment, printers, and charging stations. In Becker’s plan, the engineering and design could be done by the German team in Germany, and, with training, the installation and maintenance of the grids could be done by Tanzanians.

By December 2014, he had secured pilot funding from E.ON, and over the next two years he turned that pilot project into a business serving 600 households. He now has a team of 25 staff: 13 in Germany, doing engineering and IT, design, marketing, and finance, and 12 in Tanzania devoted to customer service, asset maintenance, developing new sites, and negotiating local regulations. The business is committed to hiring Tanzanians, recruiting staff from the tourism industry and from the technical college in Arusha; the Tanzanian team works with Kenyan companies to install the equipment and other technical operations. The Tanzanian brand of the company is called Rafiki Power (‘rafiki’ means friend in Swahili). Becker’s plan is to develop the start-up so that he can eventually transfer leadership of Rafiki, making it a Tanzanian company run by Tanzanians within three to five years. To that end, the company devotes much time to training staff in accounting, computer use, and technical skills.

The mini-grids rely on smart metering, and villagers use pre-paid mobile money cards to pay for power. A large shipping container is the base for the grid, and the necessary equipment is stored inside. Local entrepreneurs are encouraged to make use of the grid as a kiosk, and local technicians are trained to be able to maintain the inverter and wiring. Rafiki’s German staff are always available to help address problems that may arise, if the local staff and subcontractors require.

What Becker has learned along the way is that financing mini-grids remains a challenge. While a village might take out a loan to pay for the installation, his studies and his experience have convinced him that the better path is through obtaining subsidies to offset the costs. And it is costly: the time to transport materials to remote villages, and the money required to do so, significantly adds to the cost of the grid equipment and labor. This is, in part, why Becker is focused on energy for productive use, not just for more consumer goods. To that end, he is working with NGOs, what he calls ‘an ecosystem of partners’, to provide long-term training and education for income-generating enterprises. With this larger ecosystem, and the support of E.ON, Becker hopes to install more than 100 more mini-grids in the next few years. And personally, he finds solving the puzzle of rural green energy a nice contrast from his earlier career in finance. ‘It’s really nice to see happy people in the villages [when we install a mini-grid],’ he says. ‘More satisfying than sending another report’.