Sunlabob: Pioneering rural electrification in southeast Asia

Thursday May 25th, 2017 - Kristina Cvitko

Mid-90s, Lao People’s Democratic Republic. As a German electrical engineer who has recently moved to one of the poorest countries in the world, Andy Schroeter sees the potential that can be had for energy access in remote areas. At the time, Laos has an electrification rate of 30%. “Aside from cities in the Mekong Valley,” he remembers, “many places did not have a grid connection at all.” Schroeter worked for a German governmental agency in the development field, and was heavily involved in Germany’s anti-nuclear power movement in the late seventies. This lifelong passion for renewable energy led to the creation of Sunlabob (http://www.sunlabob.com/) in 2000.

“I would say we pioneered in electrification,” he says. “We implemented village grids when no-one was talking about it, synchronising different energy sources, such as electro power with solar, a genset for deconsumption.” An early challenge, since he was working with virgin territory, was gaining the acceptance of a community in the middle of nowhere. Community development became an important strategy, through the use of videos, or puppet shows.  “Working with remote people is always about changing their way of thinking,” he says. “Especially here, where we are close to China, with their cheap garbage products.” If Schroeter could change anything, it was to help people think more about the long term. For example, he says, LED lights were not popular because they were expensive, despite their energy efficiency. “People would rather pay 70 cents every month for a cheap Chinese lamp, compared to an LED lamp which will cost 5 dollars and would last 5 years.”

Schroeter describes the gray zone that Sunlabob occupied in its role. “It’s very important to draw the red line – we are a commercial company, not an NGO.” The solution, to steer away from this, was to work more on the company’s core concept – being innovative, with materials and operation models. “We developed our own solar rechargeable battery lantern as a service-oriented solution, and we have around 650,000 direct beneficiaries.” Exploring is important, he adds. “Our problem is that we have always been ahead of our time.”

SunlabobMyanmar

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There is a gulf between the private and the public sector doesn’t help, says Schroeter, which impacts being commercially viable in a country like Laos. “They speak two different languages. We’ve come to realise that our beneficiaries are just that – beneficiaries, not paying clients.” There has been no shift in thinking to bring the subsidies applied to grid extensions in Australia, the American mid-west or Europe here.” Whilst there has been a slight reduction in world poverty figures – more than 1.3 billion today – he wonders out loud what impact “the billions pumped into the market” has made. “Twenty years later, I am still joining international conferences and arguing with public donor agencies who want inclusive business models and who want to try public partnership models – but this can’t be our responsibility alone. This old traditional public-private partnerships model is not really working in less developed countries here in South East Asia.” The strategy has been to stick with supporters of the ‘base of pyramid’ market. Sunlabob developed its own microprocessor for solar lanterns dispatched to villages; today, smartphones are widespread, and solar home systems are rented out.

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Enthusiasm pulled Schroeter through the organisation’s early years; investors only came in around 5 years ago, and it has won a series of awards. “I really thought I could change the world,” he says. Within the company’s first five years, Schroeter was hiring people in public relations, human resources and engineering from all over the world, which is when he realised it made sense to go global. Students from institutions such as the Lund University in Sweden, Nimes in France, Braunhofer Institute in Freiburg or Harvard University came to do internships, a situation which also plays out well with the community on the ground, he says; he admits that there is a lack of capacity in general in Laos. “You can meet some graduates from the local university who are sometimes not very computer-literate, unless it’s on social media.”

For Schroeter, Sunlabob bucked a trend where multinationals were moving to Laos. He shifteed the company’s holdings abroad, to Hong Kong. An office was opened in Myanmar (http://www.uberiscapital.com/ 2016/07/06/sunlabob-renewable- energy-completes-11-solar- mini-grids-myanmar-villages/), “a booming market with 44,000 villages without access to energy”. Investors were interested, but there were too many challenges in staying registered in Laos; the local currency risk, an unclear investment law, no international banking, expensive transaction costs and general lack of transparency, due to the corruption that can be endemic in developing countries. The board of directors help keep the company on track, particularly in the “grey zone” that Sunlabob exists in in Laos. “It’s very important to draw the red line – we are a commercial company, not an NGO. Our board calls me back and reminds me that we are here to make money, and not to change the world.”

SunlabobTeamwork

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Here we come back to another challenge in the business model – Sunlabob lags behind companies which, in the meanwhile, introduced feed-in tariffs and net metering. Schroeter refers to Laos’ reputation as “the hydroelectric battery of South-East Asia” (https://www.foreignaffairs. com/articles/laos/2016-09-01/ recharging-asia-s-battery), pointing out the multitudes of independent power producers (IPP) from Russia, China, India, Germany, France, and many others. “The potential of hydro is around 33,000 megawatts in total,” he says. “These IPPs bring their electricity where the market is – Thailand, Cambodia, and we have grid lines throughout the whole country now.” Villages are increasingly connected, thanks to a governmental goal of reaching 90% of grid electrification (https://www.asiabiomass.jp/ english/topics/1601_03.html). To address the disappearing market in the off-grid world, Schroeter has taken the company into the commercial industry sector, opening a Singapore office to focus on CNI (commercial and industrial industries). “We help them reduce their energy bills by installing solar on their roofs.” Sunlabob also has tenders from organisations such as the World Bank or the EU and bilateral organisations in around 30 different countries. He wants to promote his philosophy further – simply having a tender in Tonga or the Marshall Islands in Pacific, or Guyana in South America, does not mean dropping and out of a country. “We have to explore the market, and spot business potential with the background we can offer.” To that end, Sunlabob Liberia may soon be on the horizon.

By Nabeelah Shabbir @lahnabee