Episode Transcript
Speaker 0 00:00:00 Large segments of people who live off grid have variable incomes and they struggle to pay their energy bills. Mobile power, which is actually a paper use battery sharing network, had to build a technology company and redesign the batteries they wanted to use to enable a business model that works across Africa, which is based on the customer's need. ESI Africa talks to Luke Buddhist, one of the co-founders of Mobile Power about affordable access to energy.
Speaker 2 00:00:35 Welcome to the ESI Africa podcast, brought to you by your trusted power and energy multimedia journal. You can download this and all other episodes on esi hyphen africa.com/podcasts. Let's get into today's conversation.
Speaker 0 00:00:56 Hello Luke, and welcome to the ESI Africa Podcast.
Speaker 3 00:01:00 Hi, it's a great pleasure to be here. Thanks for having me.
Speaker 0 00:01:03 So let's start off with a brief introduction to mobile power. Um, if I understand correctly, you co-founded the company around the idea of solar powered mobile power. So it's a paper swap battery. So tell us about the tick that lies at the heart of this company
Speaker 3 00:01:20 Have to confess and what we call a late co-founder. So there are four co-founders, three of whom, um, were much more risky than I, um, one of whom had the idea. Once it was kind working, I kind of jumped ship from my normal job and came across. So, um, I have to confess that, you know, there, there are some more risky, risky people in the company. Um, but yeah, I suppose the central, the central innovation at mobile power is a realization of how customers work. So back in the day when solar home systems were really getting a lot of traction, sub-Saharan Africa. So this is the idea where a customer can basically gradually over a couple of years buy their own generation assets. A house, it was absolutely sweeping the continent by storm because people for the first time could get affordable access to energy.
Speaker 3 00:02:07 But what we saw was a large segment of the 600 800 million people who live off grid actually can't afford payments. Their income is very variable over the year, and they certainly can't afford deposits. So we saw customers who were buying one serving SAS of, of washing powder, um, rather than, um, paying actually a lower cost per kilo for a large term. And the reason they do that is they, their cash very carefully. On a daily basis, 93% of our customers are below the extreme poverty line, and that means on a daily basis they've got that 1 93 to afford everything. The top of those people's lists is usually foods education. Healthcare is somewhere washing is actually quite high up the list and somewhere down towards, um, you know, at least beyond fifth, maybe 10th in some households is energy access. And those customers are using what's left over on a day to buy their energy.
Speaker 3 00:03:06 So we knew we needed to design a business model that could serve those customers on a daily basis without a deposit, without debt over a couple of years. And we needed to run it as a business. So we needed to define a, a, an operating dynamic that allowed us to make money and also the customer to get an excellent service. So all of that landed us in the space of battery rental. Um, we thought how hard could it be? It turns out it's really, really difficult. Um, we had to build a technology company in order to, to just get the technology that we required. We had to pattern, um, elements of the business model from a technology perspective. We had to pretty much redesign the way in which lithium I switch on and switch off separate charging circuitry. Um, so for those of you who got video behind me is what we affectionately call the geeks. Um, and these guys very good at battery technology, firmware, software, FinTech, and we've joined that all together in a business model that is operated, um, across the continent now. And it's really the collaboration of that customer insight, the ability to put technology into, into drive that customer insight and then capital and operating capacity to go and execute against that. That's kinda what makes mobile plate so successful. It starts with the customer, um, and works with the technology.
Speaker 0 00:04:30 So in what tier three are you rolling out at the moment and where are you expanding to?
Speaker 3 00:04:35 Yeah, so this all started for us, um, back in 20 20 15 really. We did some pilots in, in The Gambia and then in 2016 we had our first successful pilot with our own technology running from our own hubs in a town called <inaudible> in the middle of Syria. And we've grown the business from there. And it took us a long time to get the manufacturing established and set up at its scale. Unit cost was really important for us. So we've, we've um, we've invested heavily in, in building our own supply chain in, in China, um, and, and we have regular operations there. In fact, in the UK office here we have some Chinese team who operate on Sheen time with sheen accents and there's lots of Mandarin and Cantonese being spoken around the office. And then in 2019 we hit on very positive unit economics. So really technology and then combining that with operational experience on the ground out there at Sierra Leon, we now have a large Sierra team operating that business.
Speaker 3 00:05:33 We're in pretty much every big town in Sierra Leone, um, including the capital city. So from there, once we started realizing positive unit economics, a whole country level, we really said, okay, this is ready to scale. And one of the great things about Sierra Leone is it's, it's very much a frontier market. I think if you can make something that works for customers in Sierra Leone and the technology can function in the infrastructure environment in Syria, you can do that across a lot of the, the continents of Africa. We moved into Liberia next. Um, it's, it's, it's different but also quite similar in lots of ways as well. So we are able to, to operate there quite quickly using Syria on your team to train up local librarian staff. Um, and we've really been very successful in Liberia. That's been fantastic market for us. Looking forward to expanding there even further over the next year.
Speaker 3 00:06:26 Um, and then Liberia and Syria are very much home for us, but both relatively small, um, countries compared to, to some of the continent. So we chose the largest one we could, which is Nigeria. Nigeria has over 200 million people. Um, I think it might be two 10 at the moment, and roughly half of those just under half of those are living off grid. So you've got a market of a hundred million people. Um, um, and, uh, a very exciting place to expand. Nigeria's just become our, our largest market. So we're taking CRM recently. Um, we're gaining about a thousand customers a week in Nigeria at the moment, launching two new locations every week, hiring a new agent more than once a day. Um, so that's very exciting for us. But we also wanted to go further and the next largest market that we could see in terms of off grid population was the drc. Um, we've recently launched an entity in the drc and um, we got some, got some guys working very hard on getting started there. We should be starting to get our first customers towards the back end of this year. Um, and again, we'll expand very quickly in Western drc, um, over the next, over the next couple of years.
Speaker 0 00:07:37 Right. If I understand this correctly, you offer three different services. So how does that work? And then where do you actually offer which service?
Speaker 3 00:07:46 Great question. Um, so yes, 50, which is our smallest battery, is our, is our largest, um, largest piece of the business at this point. We rent about half a million batteries a month, um, the customers right across the continent. Um, so that's been very successful, very profitable for us now. Um, and what we realized about three years ago is we were really hitting on positive economics is here in the uk we developed a lot of, um, technology expertise and then in subar in Africa, we built some fantastic teams, which were entirely local and we didn't have any, any British accents kicking around. And we said, actually, we, we've hit on something really powerful here. Um, the ability to, to raise capital in, in European markets where for whatever reason is, is easier in general. Um, the ability to develop technology in the UK using some of the best, some of the best organizations in the world, including the University of Shefield and Energy Catalyst Carbon Trust, and then the ability to work with our Chinese, Chinese organization to, to get the supply chain organized.
Speaker 3 00:08:50 And we said, hang on, we, we've gotta build something else. We've gotta take the spirit. We've got to stretch the advantage further. So we said, what's the next great challenge for the continent? We see the petrol, um, whilst being extremely powerful is also quite difficult for a lot of subara economies. Um, a lot of them are, a lot of the governments are spending billions of billions of dollars every year sort of slicing fuel in order to make the economies function well. Um, and in some of those economies, you know, you're looking at eye watering amounts where governments are spending more on petrol than they're spending on education, more on petrol than they're spending on military. And these are countries that have real security issues. So we realize that if we could unlock as, as the the core form of energy for a lot subsiding African countries, we could dramatically change the way in which people live.
Speaker 3 00:09:41 So that's what we set up doing. Um, we set up developing a product called the MO Max, which is a much larger battery, it's one kilowatt hour battery, and the mo max runs in our inability platform, both, um, electric motorbikes and took where vehicle agnostic so we can work with anybody's vehicles. Part of the great thing about having such great geeks in the company is we've been able to develop a battery that can operate at several voltage and power profiles and in firmware at the point of rental, we can adjust that for different bikes. Um, and, and agricultural vehicles, water pumps, that same mo Max factory also gets rented to, um, lower middle income households. Um, so the classic example would be somebody who drives your Uber or your bulk in, uh, in Lago generally those kind of customers are, are running a small generator between nor and five kilowatt peak.
Speaker 3 00:10:37 Um, in the evening. The majority of the fuel that they're using and burning isn't actually going into useful things like running their fridge or turning their lights on or charging their phone. Most of it is literally getting a bit smoke. And what we found is there's, um, a very powerful report published by A two e I and Berg that showed that a lot of those consumers are actually using a relatively small amount of energy, um, to get some very powerful services. So we've been replacing those petrol generators and replacing that guy's daily trip to the petrol station with a daily trip to a mo solar powered mo hub where they're able to rent a battery that will run ac appliances like fridges and freezers, and it's the same battery that runs the motorbike, taxis motorbike. Um, so we really are, um, taking, taking petrol and replacing it sunshine. It's a very exciting journey and that's really, really one I think I'll spend my next doing at least.
Speaker 0 00:11:34 So now your business also incorporates an app and a mobile power platform that the agents actually use and it appears to be decentralized and it can work offline. So was that the aim right from the beginning to have that kind of firmware or did that come about organically as the business progressed?
Speaker 3 00:11:53 Great question. Um, I think the short answer is no. It was, it was an absolute non-negotiable from the start. All of the best entrepreneurs I've ever met, um, are sub-Saharan Africa. I think there's something about the environment, something about the way in which people learn how to do things that just makes people excellent entrepreneurial skills. And what we've always wanted to do is take technology that's available, um, to us here in here in the uk capital that's available often to, to western entrepreneurs, um, and access to supply chain and really put that in the hands of the most powerful entrepreneurs. Our app enables us to do that on a micro level right across the continent. And when you look at a lot of last mile distribution businesses, the most tricky part of that is, believe it or not, managing the last mile. And I think our, our platform and when you combine that with the hardware, allows us to, to, to work with those local entrepreneurs and empower them to run their own businesses.
Speaker 3 00:12:49 And, and I'll be honest, we, we make money from doing so by those partnerships, but it's really the app partnered with the, the, the charging infrastructure and access to capital, access to technology, access to supply chain, um, that is the powerful element about mobile power. Um, and does enable us to, to, to kickstart local economies. And, um, and we do it in partnership with local entrepreneurs. Very proud of the fact that, um, in each of the countries there are only expertss. You know, we've trained, um, local guys to do installs. We've trained local guys to be the agents. We've trained local guys to operate at the finance level at local as well. So, um, it's been really powerful. 37% of our, of our local agents, um, a female, a lot of those ladies have never had job support in, in, in formal markets. And we've had to work, um, very hard at making sure that that's, that works with local societies, but we're extremely proud of that. Um, and there's some amazing stories coming out. All of that is possible because of the, the app platform that allows us to scale that with low management overheads. And like I said, we're hiring more than one agent every day that's enabled by, by our app platform
Speaker 0 00:14:03 Now. Um, I think you've actually in a way answered this, the role of local partners in developing and skating up the, the power, um, hubs. It seems to be a very big deal for you.
Speaker 3 00:14:15 It's actually crucial. I mean, um, we, we each play a part in, in mobile power's business and, um, you know, I'm, I'm on this podcast and, and talking a lot rubbish most of the time, but the guys who are really doing the real stuff, um, out there on the ground, the agents who are dealing with our customers on a daily basis and then they're area managers who are working with those agents to make sure the customers get consistent basis. And then there's country directors who are, who are making sure the company's able to operate and working with our local government partners on the ground, our local funding partners on the ground really. Um, I'm just part of the enabling environment here back in the uk. I think, um, we're able to redress a lot of the, the advantages that we have in the west and, and put those into, into someran African markets and we're very committed to that. But yes, it's all about enabling a local entrepreneur without those guys. Just, uh, just some interesting circuit boards
Speaker 0 00:15:09 You mentioned. Um, also the idea of last mile delivery. Is that actually how you see your business? Um, is that where you actually categorize it rather than We are a creator of a battery,
Speaker 3 00:15:22 Not like one of our investors. Um, the question we get asked most is where do you categorize yourself? And I think it's a very difficult question to answer. We're effectively completely changing the paradigm in which energy works. We're changing the paradigm in which local entrepreneurs are able to, to access the rest of the world. You know, if you'd be one of my customers therea for a couple of years, I'd have an awful lot of data about you and I'd be able to, to bring you powerful solutions as a result of that data. So are we last mile distribution? Yes. Are we a technology company? Yes. Are we an IP company? Absolutely. Are we a Chinese supply chain company? Yes. Are we working with motorbikes from all across Asia? Yes. Um, so it's very difficult cause I think we've been so customer led that actually we've built up from there and then just, just built whatever infrastructure we needed to do that.
Speaker 3 00:16:10 Are we a CNI install sale company? Yeah, we're installing multiple megawatts of solar across the continent, an absolute rate of knots. So it's very difficult to categorize mobile power, but last mile is a crucial part of this business. The majority of the 600 million people who don't have reliable access to energy and and growing, um, are in rural areas or they're in per urban areas or they're in urban areas that don't have access to traditional infrastructure, including roads. So you've got to be able to operate it last mile and you have to be able to do that powerfully and reliably. So yeah, it's a crucial part of our business. It's one of what we see as a paradigm shift.
Speaker 0 00:16:55 So what are some of the challenges you've faced in rolling out the hubs, especially since they are across different countries where conditions are different and people are different and they understand things in different ways? And have you been able to apply what you've learned in one space to another space?
Speaker 3 00:17:14 At, at my level here in the uk it feels like it works everywhere. And, but I think the reality of that is because we partner with local guys through the business, actually it's the local guys who adapt our business to, to the local context. So, you know, we have, we have lots of hubs all over the continent and I think if you were to go to any one of those hubs, you'd see a slightly operating op operating model at each one of those locations. Some agents are riding around on motorbikes because it's a, it's a very rural spread out area and they're taking batteries for their customers on their bikes and the over end extreme. Some agents just stay in the hub all day and there's a queue outside their, and they're renting to batteries to customers directly. So we, we, we see the kind of local agent part of the business.
Speaker 3 00:18:01 Um, and what those guys are able to do is, is is adopt that to local local context. We're operating in urban environments as well, which again you'd imagine would be entirely different. You operate with those local agents and, and they, they work out how to do it. I think some of the big changes that we'll see across the continent next decade are to do with the price of fuel. Um, so Liberia at one point have the most expensive fuel on the planet. We're also operating in Nigeria where the fuel is some of the cheapest on the planet. That creates very different dynamics for us and, and different dynamics as to which services will work in the right place. Um, and I think we'll we'll see that shift over the next decade as, as sunshine becomes the alternative and most powerful energy, um, provider to a lot of these subha African countries.
Speaker 0 00:18:50 It's interesting, um, talking about price of fuel, because I've just written a story about how, what happened in, uh, Ukraine and it being invaded by Russia, how that, um, changed the price of oil and how that affects in, um, energy security of countries throughout the world and how that's gonna change going forward. What the, um, energy systems will be like. And then you're talking about price of fuel from a completely different point of view, but just as relevant and important.
Speaker 3 00:19:21 Yeah, I mean, um, I'm in this business cause I'm, I'm very excited about the transition that the world's gonna go on. Um, a lot Africa is not about transition, it's just about getting on the engine line for the first time. Um, and I think that's something that's genuinely exciting about Subar Africa. Um, here in the UK there's lots of discussion about, about energy prices, um, and there's lots of discussion about how that affects the economy and in some ways that creates opportunity for a transition to renewable energy. But in Subar Africa, you can do that from day one. Um, so we're able to provide our customers with cheaper energy than they've ever had before. We're able to provide motorbike drivers with cheaper access to, to, to energy than they've ever had before. Um, and, and that's because you're building something from scratch the right way.
Speaker 3 00:20:09 You know, I often talk about, um, Western power, we wouldn't build them in the way that they're built nowadays with big power stations are in the middle of nowhere that transport ac current to, to places actually we'd have a totally different way of doing power. We'd have micro power stations and everybody's houses sharing between neighbors these kind of micro, micro grid organizations with batteries at their center is, is very much what we do. We have the opportunity and indeed we're executing on it in Saharan Africa to to do so and build grid and energy distribution systems that are suited to, to sunshine rather than fossil fuels. And, um, I think that's extremely exciting for Saharan Africa. You know, our, our riders are no longer exposed to fluctuating prices of petrol. They're no longer queuing at, um, petrol stations that have not enough fuel, um, because the sunshine is is available readily. And we've, we've found a way of packaging it up and making it useful across transport and household energy and it looks entirely different. And, and my challenge I think to to, to us is a, as a, as a planet, is let's not do things the way they've always been done. And I'm very excited about the opportunity that Africa has to lead the way in sharing that.
Speaker 0 00:21:20 So mobile power as one of the companies I came to because of Energy Catalyst. And you've received support from them. So in what way has it been a financial advisory? How are they working with you?
Speaker 3 00:21:34 Yes, all of the above. Um, so Mayor Power, um, obviously very innovative in terms of technology and business models and energy Catalyst has been exceedingly helpful to us all the way through building our, building our organization and, and the why Innovate UK and of course British government as well is being extremely supportive of both the, um, development outcomes that mobile power has as well as the technology. And so yeah, capital with crazy early ideas that you just need a grant to get off the capital to go and scale that. With Grant help with working with equity investors. Being on this podcast and getting to talk to you and your listeners, Teresa, is is something that Carbon Trust and Energy Catalyst brought to us as an opportunity yesterday. Um, flying us up to conferences, um, giving this platform to speak, helping us do all those sorts of things. They, they've been exceedingly helpful with, with getting the word out there about mobile power. And I'm, I'm absolutely sure we wouldn't be where we're today without.
Speaker 0 00:22:34 So in terms of future plans and ambitions for mobile power, do you want to take over the world or what is it that you actually want to be doing?
Speaker 3 00:22:43 Um, we really wanna empower, um, people who, who, who, who, like I said, are some of the best entrepreneurs planet to, to be able to scale that entrepreneurial skill, to be able to move up the energy ladder, to be able to get access to technology and capital that previously was, was just too risky to put into these, to these geographies. And I think we've, we've proven that on a small scale so far. Um, I'm in for at least the next decade to seeing what we can do with, with that and, and go all the way. Energy is a great place to start as we've seen. And um, I'm sure the article you wrote about the prices of fuel across the world, it completely transforms economies, um, even a small fluctuation and the price of a fossil fuel. But from there, you know, what makes business go around this money a lot of the time access to capital, making sure that capital gets put in the hands of the most powerful, um, entrepreneurs to, to be able to change, um, a market.
Speaker 3 00:23:42 And we have rich customer data, we have have rich agent data and I think I'm very excited about bringing people into, into, into a world where we can, we can put capital out there. Um, we're very excited about the opportunities to redesign and rethink the ways in which grid networks, transport networks built up. Um, I think there are a lot of very powerful players in Sub-Saharan Africa with the inability, we're looking forward to partnering with those guys. Um, and, and indeed more countries, you know, we're operating in, uh, seven near eight countries now, but I think, I think there's a lot of places we this, I'm hoping we don't have to come to South Africa. I'm hoping that, uh, you guys continue to, uh, to move forward to your engineers, but um, there are certainly other places where I think there's, there's work to be done.
Speaker 0 00:24:30 Well if you're moving into the, um, smarter mobility space, that is something that, you know, we would love to actually get going here in South Africa. So you might actually be coming to my nick of the woods at some point
Speaker 3 00:24:43 And very good. Well, yeah, absolutely. And I think, um, inability for us is, is a powerful tool. Electric motor bikes are, and, and tuks are very exciting, but mostly as a medium. Um, I think what we're very excited about is taking sunshine, making into electricity and then making that useful work. Our network of battery swap hubs that are entirely so powered, going to be very transforming, um, for economies, very transforming for the planet, very transforming for the way we think. And that's where mobile powers very focused.
Speaker 0 00:25:17 I think you need to come this way. We need it. Thank you so much for making the time to speak to us. I look forward to finding out what mobile power is going to be doing next.
Speaker 2 00:25:35 You have been listening to an ESI Africa podcast for the latest news reports and interviews on power, energy, and related industries, visit the ESI Africa website on esi hyphen africa.com or follow us on social media. Until next time, thank you for tuning in.
