SolarCity Corp Leads $16M Funding Round For Off-Grid Electric

SolarCity Corp Leads $16M Funding Round For Off-Grid Electric
By BrokenSphere (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

SolarCity Corp (NASDAQ:SCTY) is among investors in a $16 million funding round for Tanzania-based Off-Grid Electric, which offers pre-pay solar energy. Microsoft co-founder Paul Allen’s Vulcan Capital and UK-based Zouk Capital were the other investors. It’s the second time SolarCity and Vulcan Capital are investing in Off-Grid Electric. The Tanzanian company had raised $7 million in its first round last year.

Off-Grid has an ambitious plan

SolarCity CEO Lyndon Rive said in a statement that millions of people in Africa still rely on dangerous kerosene for power. Off-Grid knows how to provide them more light at less cost. Off-Grid has an ambitious plan to bring solar energy to 50 million homes by 2022. Fresh funds will help the company increase its workforce while improving its hardware and software.

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Off-grid currently has about 25,000 customers. Its prepaid solar offering works just like prepaid mobile phone. Off-Grid co-founder and CEO Xavier Helgesen told TechCrunch that it required customers to pay just $6 upfront. Then the company installs a solar system on their house, including a Li-Ion battery, panels, efficient lights, and a meter. Energy collected by panels is stored in the battery. But customers can use it only when they send a mobile payment to Off-Grid and get a passcode to enter in the meter.

SolarCity betting on the right horse?

Off-Grid has schools in Tanzania to train locals to become solar installation technicians. For just $5-$10, customers get “50x more light” than kerosene, plus the ability to power a TV and charge their phones. You can’t charge an Android smartphone with kerosene. So, locals go to a nearby convenience store where they have to shell out $0.25 every time to charge their phones.

Pre-paid solar represents a huge opportunity in Tanzania, and SolarCity seems to be betting on the right horse. In a country where average annual income is $700, customers can’t pay $1,000 upfront for solar systems. So, Off-Grid’s business model looks promising, especially in the African market.

SolarCity shares fell 3.04% to $50.07 at 11:54 AM EST on Tuesday.

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