Tomorrow, Tesla and SolarCity shareholders will vote on the merger of the two companies. While it’s not exactly a done deal, everything points to the merger going through after major institutional shareholders voiced their supports and CEO Elon Musk disclosed that early votes were “overwhelmingly” in favor.
Tesla’s CEO recently mentioned that the combination of energy storage and solar energy will enable developing nations to leapfrog the fossil fuel era and go directly to renewable energy.
The comment is particularly interesting if you consider that through its acquisition of SolarCity, Tesla is acquiring shares in a company that is trying to attempt exactly what Musk was describing. In his recent documentary ‘Before the Flood’, Leonardo DiCaprio asked Musk how his vision will help developing nations. He answered:
The advantage of solar and batteries is that you can avoid building electricity plants at all. So you can be in a remote village and have solar panels that charge a battery pack that then supply power to the whole village without ever having to run thousands of miles of high-voltage cables all over the place. It’s like what happened with landline phones versus cellular phones. In a lot of developing countries, they just didn’t do the landline phones. They went straight to cellular.
Interestingly, that’s almost the exact mission of Off Grid Electric, a Tanzania-based startup offering solar power and energy storage as a service to rural regions of Africa since 2011.
By acquiring SolarCity, Tesla will become a major shareholder of the company since SolarCity led two early rounds of financing of $16 million and $25 million last year alongside another Tesla investor, DBL Partners. SolarCity’s CEO, Lyndon Rive, is on the board of the startup.
Of course, there’s the problem that Africa is an extremely poor continent and people often can’t afford expensive solar panels and batteries (more than 620 million people in Africa live without access to electricity), but it’s a chicken and egg situation. The population is poor and can’t afford energy – and since it can’t afford energy, it can’t operate businesses and lift itself out of poverty.
But Off Grid Electric finds that by offering extremely low-cost systems for low monthly payments, customers tend to find more use for the power and the company can scale the systems to grow with the needs and means of its customers.
Rive commented on the company during the latest round of investment:
Off Grid is expert at offering Africans what they want: clean, affordable electricity that can allow them to grow businesses, improve educational opportunity and enrich their quality of life. Many people in African currently depend on inadequate kerosene lamps for power, and Off Grid knows how to give that market more light at less cost.
Off Grid Electric deploys solar panels (generally small 25-watt modules) to households not connected to the grid, which is very common in rural Africa, and they link it to a 60 watt-hour battery to power lights and small electronics, like cell phones and radios. It replaces kerosene lights which can be a health and safety hazard.
Not unlike SolarCity’s own leasing model or power-purchase agreements, Off Grid Electric owns the systems and sells the energy capacity to its customers. Like Musk said, Africa leapfrogged landlines and went directly to cell phones, which are very popular in Africa, and customers can pay through their phones by texting a code at Off Grid, which is also branded as ‘M-POWER’ (as pictured above) in Africa.
After having raised over $70 million last year through equity and debt rounds, as well as receiving grants, the company is reporting some rapid growth by adding over 10,000 customers per month. Back in June, CEO Xavier Helgesen said that the company is now providing power to over half a million people in Tanzania and Rwanda, and last week, the company announced an expansion in Ivory Coast in partnership with the UK’s EDF Energy.
Considering Musk appears to be on board with the idea, it will be interesting to follow the company after Tesla’s acquisition of SolarCity and if there will be any involvement by Tesla.