Striving for Universal Basic Utility Access with KUDURA

Our team identified the lack of access to modern utilities as THE critical bottleneck to economic empowerment in the world's poorest communities. RVE.SOL was founded on the premise that the key to driving sustainable economic growth and empowering rural livelihoods is by providing affordable, universal basic utility access (UBUA), reflected in our socially-inclusive business model striving for 100%-connectivity. To accomplish this, RVE.SOL designed the innovative KUDURA solution, a pay-as-you-go (PAYG) solar photovoltaic (PV) minigrid (MG) platform that integrates several green utilities into a containerized, community-managed system.

If successful, we can disrupt the developing world’s utility landscape, a space dominated by old-fashioned fossil-fuel industries and state-run monopolies. Our long-term vision is to become the world’s largest socially-inclusive utility, providing affordable power, water, and biogas services to tens of millions of people. Doing so would cause a seismic paradigm shift in energy inclusion & regulation, wealth distribution, poverty eradication, and environmental impact.

There are ~1.3 billion people in the world without access to grid power, while 1.2 billion lack clean water. In sub-Saharan Africa (SSA), where our 3-5 year plan is focused, only 43% of the population is on the grid, while 40% of SSA citizens do not have access to improved sources of drinking water. Furthermore, only 17% of sub-Saharan Africans have access to reliable sources of clean cooking fuel, while globally ~3 billion people lack access; the burning of charcoal and other inefficient fuel sources exerts undue pressure on the environment as well as the overall health of families utilizing these fuels.

In rural areas, we find that this utility deficit directly contributes to poor health, hinders the ability to establish & operate robust small businesses, and exacerbates inefficient & nonproductive uses of time (e.g. time spent fetching water & cooking fuels, loss of night-time working capacity, etc.). Much of this burden is placed on women and young girls, who are tasked with collecting water & fuel from often far-away sources. This removes them from school, renders them incapable of earning income, and exposes them to potential sexual violence as they travel vast distances to carry out their duties.

Our KUDURA solution is designed to address utility deficit in off-grid communities with the aim of empowering rural livelihoods and eradicating poverty. With our socially-inclusive business model striving for 100%-electrification, we are the only MG developer in the sector connecting households that are consistently left behind in the race for energy access. These rural citizens we seek to connect where others don’t (or won’t) are often marginalized groups such as widows, disabled, elderly, and at-risk youth; almost 80% of our customers are subsistence farmers making less than $2 / day.

In addition, KUDURA’s multiple utility offering addresses a number of critical community economic development needs as a more pragmatic approach to broad-based rural development than the typical anchor-business-consumer model. Furthermore, RVE.SOL has identified key regional commercial value chains we can transform by powering productive energy use (PEU) appliances. Through our small business (SME) empowerment and appliance finance initiatives, we offer KUDURA customers the opportunity to establish and operate robust value-added businesses that will provide sustainable sources of increased income.

KUDURA is a novel technological approach to the problem of energy access & utility deficit in rural communities. Our KUDURA design, integrating PAYG technology with solar PV, water purification, and biogas generation, is patented in EU, ARIPO, Nigeria, and South Africa. This multi-utility functionality provides rural communities with a number of critical resources to improve quality life and empower livelihoods, simultaneously progressing RVE.SOL’s climate change agenda while mitigating revenue risk by diversifying income streams to off-set the CAPEX-intensive solar PV generation hardware. Furthermore, by striving for UBUA with our socially-inclusive business model, we ensure that the poorest members of rural communities have access to KUDURA services.

Once we have commissioned a KUDURA site within a community, we offer SME empowerment and appliance finance programs to further reduce economic inequality and promote inclusion for all. The SME empowerment courses are designed to educate and train our customers on basic business acumen so they can understand how to launch and operate a successful enterprise. Once completed, entrepreneurs can apply for an appliance finance loan, so that they can begin using the appliance to generate more income – meaning they are able to pay off the appliance with the new income source while consuming more power. Most of our customers do not qualify for micro-loans from banks or other institutions; yet RVE.SOL intimately understands the value of providing our customers with not only the knowledge, but the means, to establish and run a business. To augment a common idiom, not only do we teach someone to fish, we provide the rod, tackle, and bait, too.

RVE.SOL has operated a KUDURA pilot at Sidonge A Community in Kenya since 2011 as the first privately-licensed MG in the country, reaching 98%-connectivity of all homesteads (172/175) in the neighborhood in 2018. On the back of this deep-dive pilot and socially-inclusive business model, RVE.SOL closed our Series A financing round in August 2018 to replicate our KUDURA pilot to 10 new sites across Busia County. This ongoing “Phase 4” replication project will provide 15 communities with affordable power and water services, connecting 2,100+ new consumers to the grid, including 200+ productive energy use (PEU) applications (e.g. SMEs, clinics, schools, religious & social centers, etc), affecting a beneficiary population of ~12,500 people. This Phase 4 expansion forms the foundation of our 5-year “Path to Scale” seeking to connect 50,000+ new consumers by 2022, affecting a beneficiary population of 250,000+.

KUDURA is innovative in 4 key ways:

1) We offer a patented multi-utility containerized solution, combining into one system solar PV power generation with clean water filtration, biogas production, and PAYG metering technology. Our multi-utility model is a more pragmatic approach to broad-based rural development than the typical anchor-business- consumer model; it also fundamentally mitigates revenue risk while progressing our climate action & social empowerment initiatives.

2) Our socially-inclusive business model striving for 100%-connectivity is unique in the MG sector as our competitors tend to favor connecting “high-value” customers at the expense of the poorer households. Proving that sustainable, profitable UBUA is possible is key to our ethos – and the only way to ensure that all families have access to basic modern utilities.

3) We spent 7 years with a single pilot site in preparation for scale: honing our technology to the market; better understanding the affordability & consumption habits of our consumers; tweaking our business model and tiered tariff offering; developing SME & appliance finance initiatives based on real-life circumstances of our customers; earning government support. This patient approach shows we don't solve problems from an ivory tower, far from the realities on the ground.

4) Our SME empowerment & appliance finance initiatives drive PEU, transforming entire regional economic value chains onto renewable KUDURA power; creating new, localized income generation sources.

To meet the utility needs of Africa, the KUDURA model consists of a compact and autonomous container producing electricity, biogas, biofertilizer, and potable water. The technologies for the pilot project were identified during the development and conceptualization phase (2010-2011).

Electricity is produced through a PV solar system and stored in a battery bank. Water is collected from rivers, lakes, and/or underground aquifers, and purified using a UV ultrafiltration system. The biogas and fertilizer systems were completely designed and developed in-house. After six months of intensive testing and technical enhancements, we validated our prototype 1.0 reaching TRL6 in 2011. 

It included a completely new control and monitoring system (local and remote), integrating a compact and robust solution. During 2012, a pilot project was implemented in which all four subsystems of the KUDURA model were demonstrated in real field conditions, reaching TRL8.

We’ve continued to innovate: in 2013, we studied a new biomass technology to produce electricity through gasification. In 2014, we began developing a pre-payment smart metering system to monitor and control electricity supply. In 2015, we filed a patent to protect our IPR, published in 2016 as WO/2016/173622 “Autonomous Utilities Container”. In 2018, we began developing our Business Intelligence Platform which provides customer experience agents, engineers, and management with a unified data view across customers, payments, and hardware assets to optimize their day-to-day work, and a portal to measure and display our 9 Key Performance Indicators (KPIs) internally and to investors / donors. Presently KUDURA technology is at TRL9.

Over the past 6 years, KUDURA has supplied Sidonge with affordable power through our solar PV grid, clean water via ultra-filtration technology, and a short trial of biogas & biofertilizer production. During this pilot we expanded the grid from 12 to 172 customers, increasing PV production capacity from 5kWp to 9kWp. This steady expansion proved that there was high demand for KUDURA services within Sidonge, validated by our growing list of pipeline sites in Busia County.

RVE.SOL conducted impact studies at Sidonge over this period, measuring the success of our KUDURA technology in driving social, gender, environmental, and economic change. We found:

• 70% increase in disposable income from more affordable energy access

• 180% increase in girls school attendance

• 47% increase in average primary school grades

• 66% reduction in malaria infection due to increased use of nets tied to increased income

• 72% reduction in kerosene use due to availability of affordable power alternative

• 100% increase in cassava yield due to access to educational media via KUDURA-powered TV

• Empowered 13 SMEs (67% women-led)

Moving forward, we will implement our 9 KPIs proving our Theory of Change (ToC). Our 9 KPIs are divided into 3 categories and 9 subcategories: Business – Financial & Profitability; Customer Satisfaction; Operational Efficiency / Social – Empowerment of Women & Economy; Multidimensional Poverty Index (MPI): Health & Education; Connections (ESMAP) / Environmental – Renewable Energy; tC02 Reduction; Recycling & Lifetime Electronic Waste.

RVE.SOL’s Sidonge pilot has been ongoing since 2011. In 2018, we finished expanding the grid to reach a landmark 98%-connectivity; a figure unrivaled by our competition (and most national grids worldwide) and a milestone for the MG sector. In Sidonge, we have 172 houses and 13 SMEs leveraging KUDURA power, affecting a beneficiary population of ~450 people.

On the back of this achievement, RVE.SOL signed a Memorandum of Understanding with the Busia County government and closed our Series A. This close allowed us to deploy 10 more KUDURA sites, providing 15 new communities in Busia County with affordable power and water services. Commissioning is expected July 2019, connecting 2,100 new customers to the grid (including 200+ PEUs), affecting a beneficiary population of ~12,500 people. By the time of this submission, we will have 11 active KUDURA sites, ~2,275 connections (customers) across 15 communities, affecting a beneficiary population of ~13,000.

In one year, we anticipate adding 25 new KUDURA sites to our portfolio as “Phase 5”. Phase 5 encompasses our domestic Kenyan strategy to connect 5,130 new consumers (a beneficiary population of 23,400) and 450 PEUs by 2020. Furthermore, we also anticipate commissioning “Phase 6” in Mozambique, our first foray into international expansion. Phase 6 will launch 5 KUDURA sites in Mozambique, adding 600 connections benefiting ~3,000 people.

In 5 years, we plan 180+ sites in Kenya, with 30,000+ connections affecting 150,000+ rural citizens, while in Mozambique, we plan 75 sites with 10,000 connections affecting 55,000+ people. 

RVE.SOL firmly believes that accessing modern utilities is a basic right of all global citizens, driving our mission to prove that UBUA can be accomplished in a sustainable and profitable way. RVE.SOL was founded to challenge the status quo, and we are committed to inspiring the world to think differently about the biggest problems plaguing the globe. Nobody believed that UBUA could be accomplished without permanent subsidies; but we spent 7+ years tweaking and honing our model, culminating in our Series A to replicate KUDURA and confirming that others believe in our UBUA cause.

Our vision is not that far-fetched. If RVE.SOL can demonstrate that sustainable UBUA is possible and profitable, we believe the African energy sector will face a phase of heavy deregulation over the next 5 years, with solar MGs proliferating as the logical solution to connecting off-grid populations – given their versatility in traversing difficult terrain, long-term sustainability, lower CAPEX per connection compared with extending the national grid, and customer-service-focused approach. And utility provision is only the beginning – with an intimate understanding of the rural consumer, we could disrupt industries ranging from insurance and micro-finance to last mile distribution logistics. We truly have the potential to transform rural livelihoods and regional economic value chains forever.

It is our 5-year goal to be a trailblazer and pioneer of socially-inclusive utility provision, fundamentally improving the quality of life of hundreds of thousands of people, eradicating poverty, and combatting global climate change.

Perhaps the biggest limiting factor for scalability hinges on the energy regulatory environment of SSA. While the Energy Regulatory Commission (ERC) of Kenya has issued our tariff approval for Phase 4 as per Kenya Gazette Vol. CXXI-No.29 Notice 2149, multinational expansion requires regulatory frameworks that promote and protect commercial interests in the renewable energy sector across the continent. Sector unity through the African Minigrid Developers Association (AMDA – of which RVE.SOL is a founding member and sits on its Board) will be instrumental in facilitating favorable regulation.

The next barrier we face is the ability to access appropriate long-term infrastructure finance to reach economies of scale that will unlock rapid, cost-effective expansion. Our ability to scale rapidly depends on whether we can access the necessary capital that balances our infrastructure-business financial return timelines without compromising our socially-inclusive impact agenda. As a nascent sector, MG developers as a whole are having difficulty closing such appropriate capital. We need project finance in the form of 10+ year debt facilities and/or patient equity capital to flourish; this will only come when investors understand our financing needs as infrastructure companies, not as short-term exits such as solar home systems (SHS) and solar lanterns. Lastly, our time at Sidonge has taught us that customer disposable income is intrinsically tied to the seasonality of the local harvests, since 80% of our consumers are subsistence farmers. Our revenue expectations are thus linked to drought, flooding, and similar natural phenomenon; RVE.SOL must therefore drive income sources independent of farming. 

Comparing the unit economics of MGs vs. grid extension, MGs are clearly the least-cost broad-scale electrification option (based on cost-per-equivalent service connection), and the fastest (based on the speed of connection acquisition). As African leaders and governments push to connect as many of their rural citizens to affordable energy as quickly as possible, MGs are the clear-cut solution; so regulatory frameworks that accommodate the sector will follow. In Kenya, our long-standing commitment at Sidonge and socially-inclusive business model has ingrained us favorably with the regional and national authorities, evidenced by our Phase 4 Tariff Approval granted in Feb 2018.

To unlock patient capital, at this early stage we must rely on grants to reduce our CAPEX costs and programs like SOLVE to increase exposure to our cause; we are already witnessing a shift in attitude amongst commercial investors, embodied by our Series A close lead by EGIS (and the closes of our competitors). As the MG sector gains traction and investors become more familiar with the business case, we anticipate an acceleration of appropriately-structured investment.

Lastly, to counter the dependency our consumers have on agriculture (and thus environmental risk to our revenue), we must implement robust SME empowerment and appliance finance programs to diversify the income streams available to them. Although critical to our model, developing and launching such initiatives falls outside our core business of utility provision and customer service; de-risking these programs with grant finance will increase the likelihood of successful implementation. 

RVE.SOL employs 3 full-time employees at our Leiria, Portugal HQ, including our Director: Technology and supporting engineers. RVE.SOL employs 21 full-time staff in Kenya under our wholly-owned subsidiary KUDURA Power East Africa (KPEA), ranging from Director: Operations & Director: Business Intelligence, to systems engineers, technicians, project managers, SME mentors, and site agents. KPEA employs 20 part-time staff as builders, custodians, security officers, and drivers; as part of our Phase 4 deployment, we have enlisted subcontractors who have 15 laborers working full-time over the past 6 months. Almost all (90%) KPEA staff comes from Busia County.

Vivian Vendeirinho, Founder & Managing Director: African born, educated, and qualified engineer; pioneer of the off-grid energy sector. Elected President of the Alliance for Rural Electrification (ARE – www.ruralelec.org) since 2017; Chair of the Board of Directors. Founding member of AMDA; elected President and Chair of the Board.

Bruno Lopes, Director of Technology: Masters in Electrical Power Engineering from the Institute Polytechnic of Leiria (IPL), Portugal. Focuses on setting hardware and programming industrial automation systems; also specializes on creating web applications such as database, user interface, and webservers.

Robert Cunningham, Director of Operations: BSc Physics from UCLA. Strong background in logistics, operations, strengthening supply / value chains, health & safety risk analysis, & project management, borne from a robust project portfolio as an entrepreneur in Africa.

The RVE.SOL team has extensive on-the-ground experience in SSA, providing for a nuanced understanding of the operations and logistics required to execute projects. All of our site agents, technicians, and office employees are native to our regions of operations: speaking the languages of our customers; living in their communities; understanding the dynamics of rural society. As a team, we believe we have covalent skill sets alongside a desire to balance personnel in terms of culture, background, and gender; without prejudice to politics or religion. This diversity forms a cornerstone of our company, bringing an influx of different ideas to our mission. We firmly believe that the work we do will have a lasting, positive impact on the world.

RVE.SOL has had the honor of working with some fantastic organizations in our journey thus far. We partnered with Energy 4 Impact’s (E4I) “Energizing Livelihoods” program to develop our SME empowerment initiative, creating the curriculum and case studies forming the foundation of the coursework. We are indebted to the Rockefeller Foundation for providing the grant finance to kick-start our appliance finance program through CrossBoundary Energy’s Innovation Lab, while working with us to measure and evaluate the impact from these activities.

Furthermore, we were one of three recipients of DFID’s Green MiniGrid (GMG) Facility in Kenya, catalyzing our Series-A and directly contributing to our Phase 3 expansion, which resulted in the 98%-connectivity of Sidonge. EGIS lead our Series A as France’s largest infrastructure engineering company; they have a long-term perspective on infrastructure project development, deployment and operations. They operate airports, highways, and electric vehicle charging networks, amongst others. This capacity and scale means that they have infrastructure market experience internationally (with a 10 years old operation in Kenya) and access to the type, and amount, of funding we need to support scale and growth to reach 100,000’s of consumers.

RVE.SOL has a diversified revenue base borne from our multi-utility service offering and robust appliance finance program. We earn revenue from power sales in the form of connection fees & energy bundles purchased (variable kWh price). We sell electricity to homesteads, commercial establishments, institutions (schools, clinics, mosques, churches, etc) & the Busia County Government for public (security) lighting along the main roads in KUDURA towns. The electricity is also utilized to power a pump and ultra-filtration system which allows us to sell clean drinking water. We sell water at bulk rates (for community use) & at retail rates by establishing water bottling operations for sale at regional markets. In the near future, we plan to install biogas digesters at KUDURA sites to provide safe & renewable cooking fuels from livestock manure. In addition to utility offering, our appliance finance program earns profits through interest on the loans we provide.

Long-term, we are developing a data monetization strategy to leverage the fact that we are gathering real-time information on a set of consumers that are currently “in the dark” – they often have no bank accounts, no insurance, no footprint in the financial space. However, through our smart meter and backend platform, as well as our appliance finance program, we have an intimate lens into the affordability and consumption habits of these customers. We know what appliances they use both personally and commercially; how consistently they repay loans; when, how often, and in what quantities they buy power.

RVE.SOL is an infrastructure business designed for the long-term, from our technology choices to our patient attitude & persistent optimism. At its core, KUDURA will succeed because of our customers, which is why all of our sites are managed by a full-time staff member from that community – essential for project buy-in. The 3 key drivers of financial sustainability are: minimize OPEX/connection through efficient & optimized O&M protocols by distributing overheads at economies of scale; decreasing CAPEX/site through R&D, smart tech choices & savvy trends awareness; driving Average Revenue Per User (ARPU) steadily upwards over time. We accomplish the latter by increasing energy consumption among existing customers, which is why our SME & Appliance Finance Programs are such an integral part of our strategic plans. By powering local industry, KUDURA communities can generate wealth through value-added businesses, keeping that increased income within the neighborhood.

Our business model thrives on economies of scale. The procurement of generation hardware like solar panels, batteries, and inverters becomes more cost-effective with larger order sizes; the more sites we can deploy simultaneously, the better prices we pay. Dropping CAPEX / connection makes our socially- inclusive model more attractive by improving the financials behind Tier 1 & Tier 2 (households with the lowest affordability levels) connections. More sites also means efficient operations – a high-salaried engineer can service 10 sites vs. 3; distributing overheads and decreasing OPEX / connection. Our Business Intelligence Platform synchronizes all aspects of our operations into a streamlined system.

RVE.SOL is excited to apply to the SOLVE program in order to maximize global exposure to the utility deficit problem we seek to address, specifically through our community-managed KUDURA solution.

As a trailblazer of the energy access community, RVE.SOL and its leadership team strives to contribute to the multinational efforts to advance the UN’s sustainable development goals. This is embodied by our founding role in AMDA; Vivian Vendeirinho’s position and commitments to ARE and SE4All; Robert Cunningham’s contributions as Social Entrepreneur Scholar at SOCAP2018 and speaker at the 7th Annual MicroGrid Innovation Forum; Bruno Lopes’ thesis on rural electrification via minigrid technology in academia; and RVE.SOL’s participation in the Dubai Worl Expo 2020 as an ExpoLive Innovation Program Finalist. We are eager to continue this trend as a SOLVER, leveraging the community and network to bring light to our mission.

In addition, we would utilize the SOLVE Prize money to prove our UBUA model at scale while broadening the scope and depth of our two PEU initiatives aimed at driving sustained economic empowerment in rural communities. We would accomplish this by subsidizing connection costs for Tier 1 (T1) & Tier 2 (T2) consumers, families with the lowest income levels (primarily subsistence farmers and marginalized groups), ensuring 100% connectivity of all households at KUDURA sites; facilitating the implementation of our SME empowerment course to educate & train prospective entrepreneurs on business basics; purchasing PEU appliances and developing M&E toolkit for loan finance.

KUDURA is inherently a solution aimed at serving the poorest, and often the most forgotten, members of rural communities through our socially inclusive business model. With our tiered tariff and connection fee model, derived from meetings held with community members themselves, we ensure affordable price points for all. Our appliance finance and SME empowerment initiatives provides additional opportunities to these poorest households to access products they wouldn’t be able to afford otherwise. By hiring full-time members from these communities to manage and operate the technology, we ensure the long-term sustainability of KUDURA through community buy in at all levels. We are excited to represent GM on Community-Driven Innovation through our innovative KUDURA solution.