Impact Hub Manila Fellowship

Solar Nett, a Solar Energy Network for the rest of us

We want more middle class households in the Philippines to use solar electricity.  We want to install 1-2 solar panels on 1M rooftops and address the main concern most people have with solar--initially large upfront cost.

In a Household Electricity Consumptions Survey (HECS) in 2004, 92% of the 14.6M households used electricity.  Now it is close to 20M.

In that survey, the energy consumption per year, per family, attributed to refrigeration amounted to 1000kwh to 1500kwh per year.  The problem with electricity rates is that they climb year after year 

Solar power can reduce that fixed cost.

1-year cost for refrigeration

1-year Energy consumption for refrigeration

w/o Solar

w/ Solar

w/o Solar

w/ Solar

10k-15k paid to Distribution Utility (DU) such as Meralco

2k-11k paid to DU

1000-1500kwh

200-1100kwh supplied by DU

4k-8k Savings from Solar

400-800kwh Generation from Solar Energy

The problem with solar is that it requires a large upfront cost, keeping it out of reach even from the hardworking middle class household.  A solar power grid-tied system that can generate savings to run the refrigerator of a household, including installation, is at P30k for a 250Watt, 1 solar panel package and P54k for a 500Watt, 2 solar panel package. 

The solution to make solar more accessible to the middle class is to offer it as a lease-to-own system.  The homeowner prepays his electricity bill for 1 year plus a minimal installation fee.  He then uses the savings he gets after a year to prepay the succeeding year.  The benefit of this scheme is that the homeowner pays a fixed cost for his electricity without any increase while solar generates almost the same amount of energy year after year for 20 years.  After 7 years, the system is his to own and his electricity from year 8 onwards is essentially “free”.

The other problem with solar is that not too many people still know about its benefits to the pocket and the environment.  It is a real energy saving device  and we displace close to 1kg of carbon in the atmosphere for every 1kwh of energy generated by solar.  We need to bring together solar suppliers, investors, consumers and installers.  We need to plug the system into the internet and connect all those who subscribe to this system to a network of like-minded individuals and groups. 

The homeowner further gets historical and real-time data of his savings and solar energy output for the lifetime of his system’s operation.  In being able to view historical output, the homeowner can assess, review his electricity savings.  The investor can also see where his solar panels are being installed, how much they are producing and how much impact it is doing in terms of kwh produced and kg of carbon displaced.

We call this network Solar Nett, a platform where producers and consumers of solar electricity can share views, compare quotes, make deals or view solar energy output of the Philippines as it moves toward a more sustainable future.

Who faces this problem?

1Million (1M) households belong to the hardworking middle class, which is around 12.5% of the estimated 8M total households who use electricity for refrigeration in the Philippines.  Aside from a refrigerator, they own their own house and lot with strong roofing materials, a computer, and a cellphone.  These prospective customers will be mostly educated with a college degree, have an internet connection, and a social media network and most likely own a smartphone.

Their electricity bill is anywhere from P3,500 to P20,000 per month. While they can pay 10-25% of their income on electricity, they certainly don't look forward to paying for it every month. They don't want total independence from the DU but some measure of security against electricity rate increases and power outages.  In December 2013, Meralco rates jumped 50% after 1 month without warning.

In the end we want want consumers of electricity who want to be prosumers.  They are simply not consumers of electricity but will also be responsible producers of electricity.  Some of them will have knowledge about the harmful effects of climate change and so they want to do consume electricity in a sustainable and renewable way through solar.  But most will want to save on electricity in whatever way possible.

Through education and our own solar network SolarNett.com, we want to target those that are active users of the internet and have social media accounts such as Facebook or Instagram.  Through their network of ‘friends’, we can target environmentalists, bankers, managers, OFWs, investors, solar enthusiasts, electronics enthusiasts and anybody who is interested in saving electricity to join the impending energy revolution that will come with solar.

How does your idea address this problem?

The solution has these main components to the problems of making solar accessible to the middle class household.

1)      Lease-to-own model.  By leasing the solar power systems to homeowners at P4k-8k per year, solar prosumers don’t have to shell out a big amount of cash at the beginning.  By spreading the payment over 7 years, the cost of solar becomes affordable and accessible to the middle class household.  By allowing the prosumer to own the system after 7 years, he has incentive to pay the yearly obligations until his energy is effectively “free”.  By pricing the yearly payments according to their projected savings, the solar prosumer has no effective cash out except for the first year.

2)      Integration of Supply and Installation chain. With proper integration, solar suppliers and installers can come together to bring the best deal to the homeowner that is 15-20% lower than what is currently in the market.  Even with the lower margin, suppliers and installers together can still get bigger revenue and bigger profits overall because the market and demand for solar will be larger.

3)      Solar Supplier.  The solar supplier has the import license, the warehouse and the logistics in getting the solar panels and associated hardware from the source to the prosumer.

4)      Installer.  The installer has the technical know-how and enough experience to do the solar power installation at the homeowner’s house.

5)      Collaboration with Impact Investors.  Impact investors will finance the solar hardware and measure the return on their investment based on its impact on the environment, energy it produces, the network it creates.

6)      Integration to the internet.  The solar power system is integrated to the internet for efficient monitoring and collection of payments. 

7)      System Innovation.  The product will be an energy source capable of producing an average of 1kwh/day per solar panel installed.  The whole system will be product independent and will evolve as solar panels improve, inverter technology evolves, and battery technologies develop.  Electronic enthusiasts and solar DIYers will contribute content and hardware fixes to this end.

Working together through SolarNett, all these stakeholders can make 1M rooftops produce solar electricity.

What’s new and unique about your idea?

1)      The solar power system is a hybrid combination of grid-tied and off-grid (instead of the conventional grid-tied only or off-grid only)


2)      The solar power system prosumer can control how he wants to use his solar energy.  Or he can let the system decide how the solar energy will be used.  Purely grid-tie and purely off-grid solutions are not as efficient.


3)      It retails at the cost of a smartphone focusing on the middle income market (less than 6 figures)


4)     It produces 1-2kwh of solar energy per day to run their typical daytime load such as refrigerator.  Most installers and suppliers focus on the product offerings.  We focus on energy output.  Although we have preferred Class 1 solar panels, we will be mostly product independent and focused on bringing solar energy to the market, 1-2kwh at a time.


5)      Our solar power Hygrid systems will be interconnected through a community of prosumers at www.solarnett.com.  Each system will have a monitoring system so owners will know exactly how much solar they are producing in real-time and how much energy they produced historically.  The community will also have consumption data at their fingertips showing how much their house is consuming at any particular time.  Most systems at this "small" system level don't have good monitoring systems.

How are you going to earn money?

Revenue will be coming from four streams:

1)      Outright purchase of monitoring tool.  Including cost of installation selling price will be P10k per device.  The device has the ability to send power and energy data through the cellular networks of Globe, Smart and Sun.

2)      Subscription to Solar Nett.  Amatera Solar Technology, Inc. (AST) collects a monthly recurring fee of P100 for the opportunity to network with like-minded individuals and groups.  The member also gets a free monthly newsletter and access to tips, advice and deals on everything related to solar energy in the Philippines.

3)      Outright product purchase of the Hygrid solar power system.  Depending on the number of solar panels, total selling price of the package will be 30k-35k per solar panel per 250W output.  It will be 54k-60k for 2 solar panels, 500W output.

4)      Payment of Yearly Lease.   Not including the installation cost, solar prosumers will pay a yearly amount of P4k (1 solar panel) to P8k (2 solar panels) for the lease of the solar power system.

Do you already have customers?

We already have 150kW of solar power and over 770 solar panels installed on rooftops distributed across 30+ installations in Metro Manila and Calabarzon areas.  But we don't have as much customers in the residential areas.  The main reason is the large upfront cost involved for solar and they hesitate because they may not get their money back in 5-7 years.  They also hesitate if the savings are real and just as advertised.

Who is in your team?

Gregory "Gerry" C. Divino, Founder and CEO, Amatera Solar Technology Inc. (AST), a 2-year old company that has installed over 150kW of solar power systems in Metro Manila and Calabarzon areas.  A computer engineer with electronics background, he worked for ROHM LSI Design Philippines for 17 years before founding AST.  Lives in Manila.

Dennis Lavendero, Chief Technology Officer, an IT veteran and Business Development Specialist, worked as the Business Services Manager for Coke Philippines for 10 years before joining AST.  Lives in Manila.

Angelo Salvador, Chief Installer, has experience in household and commercial electrical installations for over 30 years.  Lives in Laguna.

 

Have you already founded/incorporated your company?

Yes

What is the intended positive impact on the environment and/or society of your venture?

The Hygrid system produces an average of 1-2kwh per day and it will have a network of 1Million solar power producers.  1M x 1-2kwh is equivalent to 1000-2000 MegaWatthours, the equivalent energy production of a 1Megawatt (1MW) coal-fired power plant for 1000-2000 hours.  Through Solar Nett, 1million solar prosumers will enjoy the benefits of solar energy, reducing 1000-2000 tons of carbon from the atmosphere per day.  We will also help each of the 1M Filipinos save at least P4k per year on their electricity bill.


Then hopefully, we can get the necessary legislation or any kind of private or public sector support so that solar can become the mainstream, not just alternative,  source of energy for the Philippines.


When solar is mentioned in the Philippines, most Filipinos think of 1 Megawatt farms in Batangas, solar power plants in SM North Edsa, 5kW systems in Ayala Alabang or small solar garden lights.  It’s as if there is nothing in between.  Our SolarNettwork + Hygrid product solution will change that. 

How will the Fellowship Program enable you to achieve your ambitions?

During the first 3 months, the funding can help in the development of the Minium Viable Product (MVP) that will be a Hygrid system. The Fellowship's network of Mentors and collaborators can help us in the development and refinement of the business model and the profiling of our target customer.

We want 10,000 prosumers in our first year, 100,000 in the second and 1M by the third.

Are you living in the Philippines?

Yes

edited on 18th July 2016, 15:07 by Gregory Divino

Priya Thachadi Jul 18, 2016

This sounds great. Its commendable that your model is addressing the biggest barrier when selling solar panels, the upfront cost.

It would be fantastic if you can crack the residential market. Would maybe some financing help with residential building segment? Or is it just the case of changing consumer mindset (which is the uphill task)?

On the Solar Nett newsletter content, why not price that into your service offering like the monitoring tool, rather than charging separately. Might give the consumer a view that getting an add on value from you, if you do that rather than paying for a separate service.

Good luck to you. Fantastic to see the progress you have made already!

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Gregory Divino Jul 18, 2016

Thanks for your comments, Priya. Appreciate the feedback.

We wanted to price the solar monitoring tool separately because there are already a lot of solar installations (unofficially around 100MW) scattered across the country. But they are not connected to any network except through their own solar hardware. So for this already with a solar installation, we can offer the monitoring tool and integrate those who buy in to the solar network, Solar Nett.

I'm really not sure if cracking the residential market means using the lease-to-own model or simply getting more people to know about solar. But we've literally spoke to and proposed to close to a hundred prospective buyers and most of them (95%) either cannot come up with the P54k or are hesitant because they're not sure solar can live up to its savings projection. So we figured it's just best to do both and see what happens.

And that means we offer solar system packages on a lease-to-own model and then integrate all the systems to a solar network, www.solarnett.com, to generate awareness and show actual savings through the power of the internet.

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Matt Jaeggi Jul 18, 2016

Wow I'm impressed - you did a really good market analysis and I'd be interested to actually become customer!
Now apart from that I'm not 100% clear on which parts of the value chain you're serving as the company. Are you also importing and installing the panels/systems? Or are you mainly focusing on the financial solutions and sales part?

Looking forward to reading your answer!

Best,
Matt

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Gregory Divino Jul 18, 2016

Hi, Matt. We're focusing on being a solar energy provider and the installation part of the equation, not on the financial and importation of solar panels part. But we want to partner with investors who are willing to wait 3-4 years before they can get a return on their investment to make this work.

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Gregory Divino Jul 18, 2016

Hi, Matt. We're focusing on being a solar energy provider and the installation part of the equation, not on the financial and importation of solar panels part. But we want to partner with investors who are willing to wait 3-4 years before they can get a return on their investment to make this work.

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Gregory Divino Jul 18, 2016

Thanks for your comment. The residential building market will be tougher to crack because of limited roof space. Making solar mainstream is changing mindset and improving the financial model.

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Michael White Jul 19, 2016

This idea seems simple to give a couple panels, when in fact you need power storage battery, charge controller, inverter and panels. The biggest problem will be collecting from someone with only p20 extra per month. We sell affordable suitcase solar with led and battery..complete kits, contact me!

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Michael White Jul 19, 2016

500 watts of Solar Panel cost P20k, 2k inverter is p3000, charge controller P2000, 250ah battery p8k....our cost complete package p33k

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Jeremie Diaz Jul 19, 2016

Hi. You have a great technological outlook of your product and services. I just have a concern on your marketing strategy. At first glance, your website solarnett looks incomplete and not user-friendly or engaging. Your website is your front line to capture leads and eventually, customers. I would suggest to have more relevant content in your website.

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Gregory Divino Jul 20, 2016

You're right, Jeremie. The website still needs a lot of work.

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