On the way to plug and play energy distribution

Statement by Modi

Together with Harmen van Heist, we first go back to 2015. "That was the time of product development, with prototypes and pilots in the field. Together with a party from Breda, we 'freshened up' the product and prepared it for mass production. It took us quite a long time. It finally came on the market in 2017 and we started to market it with a few partners—in India.

At about the same time, Prime Minister Modi of India announced that the country was 'fully electrified.' Of course, that wasn't true—it's still the largest market with people who have no access to energy—but that statement had enormous consequences. It dried up investments towards our distributors. These were Indian parties that sold our products to end customers. They received a lot of money from international organizations, but they reasoned: 'If India is electrified, then we will focus on other countries...’.”

That’s that

All at once, the Rural Spark market in India looked completely different. Also logical, according to Harmen van Heist: "After all, who invests in a product now, if the government says they will deliver it 'for free' next year?

Rural Spark had to make a choice. Van Heist: "Continuing was not an option and in 2018 we said,fortunately, that's that, we're packing our bags, we're going to Africa'. Since we worked through distribution parties,we didn't have to deal with the local trades ourselves or employ 250 people like our competitors. Because of that, we were able to pack our bags."

The transition

In Africa, Rural Spark stepped into a new adventure: "It was a new continent. We had no knowledge; we hardly knew anyone... 2018 was a real transition year for us. We didn't have to start all over again, but had to find the right way to adapt ourselves to the new environment."

Rural Spark had the advantage that there was already a product. Van Heist: "We knew how it worked, and we had much confidence in it. Initially, it was not about the product, but about the market. That was not so bad. OK, it was Africa, but we had already done that pitch for our product a hundred times. Of course, we already knew our strengths and weaknesses a long time before that."

In Africa, Rural Spark has mainly worked with local startups. "They are not really startups," Van Heist explains, "but companies that work in a different sector and see a lot of opportunities in the 'solar sector'. What works in our favor is that although we are a young company, we deliver proven technology."

Booming because of BOM

The big breakthrough came when Rural Spark joined forces with the Brabants Ontwikkelings Maatschappij in 2019. "With the help of the Tilburg University startup program, we have close contacts with the Brabant 'ecosystem'. This is how we ended up with the BOM and participated in the Investment Readiness Program (IRP). 

We told our story of the ready-made product, the gigantic market in Africa and that—together with partners—we had 'already' sold 150 pieces. They were very critical about this and stated that our actual customer is not the end customer, but the distribution party. In order to get orders of two or three tonnes instead of 150 pieces, we had to focus on those local distribution parties.

Soon we discovered that the bottleneck here was formed by the finances. You can have a good product, if your client can't afford it... then you can’t do that much. So we started looking for a solution to the financing problems of our customers. Halfway through, we found it and implemented it. And from then on, we were "Booming."

Financing plan

According to Harmen van Heist, since Rural Spark supports distribution partners in financing orders, customers are queuing up: "We offer a good deal. For this we have partnered with Atradius, one of the largest insurance companies in the Netherlands. The plan states that the customer pays us 15% as a down payment and can pay back the rest in 3 years, while we are paid immediately upon delivery. This has proven to be a huge game-changer in the market."

Four pillars

It would be too simple to conclude that Rural Spark leaves 'everything' in Africa to the distribution parties: "We are not a party that puts a container on the coast and says... have fun with it. Of course it doesn't work that way. We have a product portfolio that consists of four main pillars. 

The first is the product; just the technique. Relatively expensive in local terms, but for that we offer the possibility of paying in installments. To exclude the risk that the end customer does not pay, we offer our second pillar: Pay-As-You-Go. It's simple: a term always has to be paid by mobile phone first, and when we see that payment coming in, via our platform, the customer receives a code on his mobile phone that he has to type into our router. If he does that, then the whole thing works again.

With our third pillar—financing—we offer the cheapest capital in Africa they can get. And finally, as a fourth pillar, we offer distribution parties technical and service-oriented support. For this purpose, we have local employees in our offices at the various parties. They are our eyes and ears and offer technical support and after-sales services, which they also use to increase local knowledge of solar products."

Little difference in markets

African countries are different. Especially because of their colonial backgrounds. French influences, English influences... Yet Harmen van Heist sees little difference in 'the market': "In essence you can talk to people everywhere in the same way. What really helps—and we could never have foreseen that—is our Indian background. We work with Indians in our team and—without generalizing—Africans see them as coming from a developing country... but they are 30 years ahead of us... so they know how to do it."

A genuine African product

At Rural Spark they were 'pleasantly surprised' by another fact, namely the enormously positive reception of the product in Africa: "It seems as if we have actually developed our product for Africa", says Harmen van Heist. "We did a test in Namibia, where we let users in a few regions work with some of our products and those of our competitors. And we asked: 'Which product do you think is the best? Each time, our product was chosen as the best one. ”

Rural Spark supplies a panel, a central cabinet (the Router) and a battery pack (the Smartcube). This is the basis, where the difference with the competition is mainly the presence of the separate battery pack. According to van Heist this makes it a 'next-level product': "... energy in the house, on which you can hang all kinds of products. Ideal in Africa, where people say: 'I want a TV'. And then they see how they can get it with power."

Step to energy system

Doesn't this 'individual view' of Africans contradict the 'community idea' that Rural Spark had a number of years ago? 

"In Africa, we indeed work with a more individual model", Harmen van Heist agrees. "But you can still share our kits. And what you see are small shops with two or three kits, where people can 'rent' electricity, or charge their phones for twenty cents. In essence that's also a community, but of course not yet what we're aiming for."

But that's going to change dramatically in the future, Van Heist emphasises: "Our ambition is really not to move boxes and sell as many kits as possible. We want to move towards a kind of 'smart grid' in which different sources are linked together. Plug and play distributed energy networks. We are currently doing that with 80 Watt kits. The next step will be heavier systems, to which cables can be connected, for more efficiency and better distribution. And the next step will be to 220, with which energy can actually be exchanged between villages. ”

Sharing energy. Rural Spark is really convinced that it is necessary: "We are using it more and more in the Netherlands. When we started in India, we were already talking about it and we're still promoting it. Even now, years later. And we know for sure: it's going to work in Africa!

Rural Spark