Achieving universal energy access is about much more than bringing light to far-flung communities. It involves delivering power around the clock to homes and businesses in areas with weak grid connections, as well as off-grid communities where energy infrastructure is nonexistent.
Zola Electric, formerly Off Grid Electric, wants to serve those markets — and to do it with affordable, reliable and clean electricity.
CEO Bill Lenihan says Zola is on a mission to “democratize renewable energy globally.” The company is now finalizing its team and the product line to do it.
On Tuesday, Zola unveiled its Infinity power system, which combines solar technology with energy storage to serve as a modular alternative to diesel generators. The system is billed as the first “smart” storage product to autonomously manage multiple power sources and deliver 24/7 AC power to “anyone, anywhere.”
Infinity operates as a standalone mini-grid. It can work with both solar and the existing grid, switching between them when one power source falters, and has built-in electrical safety mechanisms to safeguard against outages. Zola says it also automatically optimizes solar efficiency to minimize energy costs and carbon dioxide emissions.
The system is also designed to be scalable,making Infinity adaptable to off-grid, weak grid and microgrid use cases.
“Our goal here, by the end of the year, is to have a product family that covers 100 percent of the energy access market,” said Lenihan. “That means rural and urban, on-grid and off-grid, commercial and residential — to be able to serve anybody at any part of the energy ladder, and then scale with them as their energy needs go up or go down.”
Zola recently pulled in two high-profile solar industry figures to help it scale. Last month, Lyndon and Peter Rive, the co-founders behind SolarCity’s rise to become the top distributed solar developer in the U.S., signed on as company advisers.
Serving 100% of the energy access market
Roughly a billion people around the world still do not have access to electricity. Roughly a billion more, plus millions of businesses, do not have access to reliable electricity. Zola wants to serve all of those potential customers, but its primary focus with Infinity is on people and businesses in cities.
The Infinity system is specifically designed to work where there is a power grid, but it only operates for a few hours a day. In most of these places diesel generators have become the default power source. Places like Nigeria.
In Nigeria, an estimated 100 million people currently rely on diesel generators each day. According to the Rural Electrification Agency, this costs the country nearly $14 billion each year, while also creating severe health and environmental problems. Diesel generators in Nigeria produce about 29 million metric tons of carbon dioxide each year, which is equivalent to the emissions from roughly 6.3 million passenger vehicles.
Zola started out in Tanzania seven years ago with a mission to replace candles and kerosene with a cleaner fuel alternative. Through successive funding rounds, the company expanded into Rwanda, Ghana and the Ivory Coast. At the same time, the company evolved from leasing and selling home solar kits to individual households, to offering solar coupled with energy storage, to bundling solar and storage with other energy-efficient devices for a more comprehensive energy solution.
With the introduction of Infinity, Zola’s offerings have become even broader. And by entering Nigeria, its footprint has become bigger.
“The launch of this modular smart storage product is timed well with Zola’s evolution beyond the solar home system space, and the broader sector’s growing focus on more urban and peri-urban customers,” said Ben Attia, a senior solar analyst with Wood Mackenzie Power & Renewables. These customers “have more willingness and ability to pay, more power demand, more sensitization to energy options, lower customer acquisition and retail distribution and servicing costs, and, in most cases, a very compelling value proposition in terms of partial or total diesel displacement.”
Individual products don’t tell the full story, though, when it comes to understanding the energy access market, he added.
Energy access companies “are all presenting themselves as prepaid [electricity] service providers, rather than pure product suppliers,” he said. “They understand that fundamentally, just like in advanced economies, customers don’t demand kilowatt-hours. They demand what they power: light, access to information and entertainment, a charged mobile phone, refrigeration, etc.”
Taking lessons from SolarCity
SolarCity co-founders Lyndon and Peter Rive will likely have some useful tips to share as Zola continues to scale.
The Rive brothers left SolarCity in mid-2017, after the company sold to Tesla (and subsequently faded from the solar landscape). After taking some time off, Lyndon has assumed the role of Zola’s board chairman, while Peter Rive is serving as Zola’s operational and technology adviser.
“I’m really excited about this next phase of the company. The products…are going to address a larger segment; it’s going to address a bigger pain point,” said Lyndon Rive, in an interview. “And if we can prove it out in Nigeria and the rest of Africa, we can scale the company to essentially all markets that have a weak grid.”
“The problem is not just in Africa,” he added. “Everybody wants reliable power.”
“If you look at the challenges that we’re going to face in Africa, it’s very, very similar to the challenges that we faced with SolarCity,” he said. “You’ve got to put the product together and create a solution that appeals to the customer. You’ve got to make it affordable, so you’ve got to provide financing. Then you’ve got to simplify delivery, so you’ve got to figure out how to get it installed. And then you’ve got to maintain it.”
“All of that requires lots of people, smart processes and technology,” he added. “And these are challenges that we have faced at SolarCity and are very similar to what we see in Africa. I think with Peter and myself joining, in terms of environmental impact, hours spent, this is probably the highest return on environmental impact company that we could choose.”
Getting the business model right
Zola Electric is also promising a return on investment.
A recent Wood Mackenzie report, produced in partnership with Energy4Impact, found that Zola Electric is the highest-funded company in the energy access space, having raised $271.6 million to date. Notable investors, besides SolarCity, include DBL Ventures, Omidyar Network and Helio Partners, and energy companies EDF and Total.
Zola was one of the first movers in the East African market, which helped it attract high-profile investors and capture market share, according to Attia. But he also said it positioned the company to learn challenging lessons for the rest of the pay-as-you-go space.
Energy access is now maturing as a sector after several years of hard work. According to the WoodMac/Energy4Impact report, nearly $1.7 billion in cumulative disclosed investment has been deployed into energy access markets through the end of 2018, and investment in pay-as-you-go home solar companies and other players is accelerating.
Sector leaders are now working to show investors the true depth of customer values through stacking value on top of existing customer relationships, Attia said. That’s happening through new service pilots, channel partnerships with financiers or distributors in adjacent sectors and leveraging deep analytics and launching new products — like Infinity.
Zola considered jumping into the Nigerian energy market several times in the past and ultimately decided to leave it alone, said Lenihan.
“We always stepped back and said, ‘We don’t have a product offering to solve it.’ It’s a different market from a product perspective. The needs of the country are much larger…and we weren’t sure we had a business model,” he said. “And I’ll just tell you, you better get it right in Nigeria, because it doesn’t give you a second chance. It just eats up companies.”
“We had to be ready,” Lenihan said. “I think we’re ready now.”