Devergy sells pay-per-use energy services in Tanzania. “Like mobile phone operators do when they sell data plans paid for on a monthly basis, Devergy sells energy plans that can be used for a specific purpose like charging a phone or powering a refrigerator, within a previously agreed period of time”, says Fabio De Pascale, co-founder at utility company Devergy.
In 2008, Fabio De Pascale and fellow Italian Gianluca Cescon travelled Latin America for leisure. Traversing the Amazon, many villages they visited lacked power. Both shocked and inspired to change a status quo, several months of desk research resulted in a top five of plausible destination markets from where to launch. As their interviews with players in the Tanzanian utility market were most consistent with the outcome of their research, Tanzania appeared as the most fertile breeding ground to disrupt an age-old sector. Fabio and Gianluca founded Devergy and started operations in Tanzania in 2012.
Eleven Tanzanian villages
“At Devergy, we sell energy services, not electricity”, Fabio is keen to point out. “The difference is that regular utility companies sell their product in kWh; Devergy sells only a targeted energy service for a limited amount of time. And that service perfectly fits our customers’ needs. Our customers buy lighting for a week while they choose to power their TV for an evening. It also means a plan runs out sooner if it is used to power a fridge when it was designed to charge a phone. In eleven Tanzanian villages, Devergy installed local mini-grids powered by solar panels and batteries, and customers pay for electricity with prepaid plans.”
“One of the reasons why we sell energy services rather than power”, Fabio explains, “is the efficiency that is fundamental to our solar-based mini-grids. A problem with selling electricity per kWh is that as a utility company, I am driven to sell more power. I am really happy when you use energy-inefficient appliances. At Devergy, we changed this, and made sure it is in our interest for you to use less energy. In Tanzania, we provide our customers with super energy-efficient light bulbs in tandem with a lighting bundle based on that low level of consumption. Because a strong focus on efficiency means that we invest less in our power generation assets.”
Selling household appliances
You are an energy company that sells light bulbs? “Yes. Our agents sell televisions and stereos too. As well as refrigerators and even barbershop machinery. Our next step may be offering a rice mill. Doing all this is expensive and distracts us, but the products our customers require often do not exist in Tanzania. If in the West you open a company, you focus on selling a well-defined product and outsource side-activities to suppliers. In Tanzania, these suppliers don’t exist. Which meant we had to take on those activities ourselves.”
The best alternative
So much for Devergy, but what will happen when Tanzania’s national grid expands into those villages where you provide power? “In fact, that is already happening and at first it got us concerned. Most of our customers, however, tell us they don’t want to switch. They like Devergy’s reliability and think our services are affordable. It is the best compliment we can possibly receive when our customers say: ‘we are not just with you because we have no alternative – we are with you because you are the best alternative!’”