How Japanese energy startup Wassha delivers prepaid solar power to rural Africa

CC BY-SA 2.0: Via Flickr by Ian Muttoo

See the original story in Japanese.

Updated on Nov. 8, 2019: Wassha told The Bridge that they positioned the funding up to the date when this article was published as an series A extension round instead of a series A round. Some words were modified accordingly.

The percentage of households owning a landline phone once used to be considered the measure of industrialization for that country. Some decades ago, the ownership rate of the landline phone in China was much lower than that in Japan. However, as mobile devices were developed and smartphones appeared around the world, the ownership rate of smartphones in Chinese urban areas has exceeded 100% (it comes to more than one smartphone per person), which is twice as much as in Japan. In several years from now, tourists to China probably would not need credit cards nor to exchange currencies at the airport, but would be able to settle all bills using mobile devices while traveling.

This example indicates that countries with well-developed infrastructures are apt to be influenced by old infrastructures when some new system has appeared, but it is rather quicker for undeveloped areas to adopt to the new system. Although Japan looked better in information infrastructure than China, the appearance of the mobile system which does not need telephone lines to be set up has changed the order in both countries.

And now, a revolution is about to break out in the electric power industry. The disruption is being wrought by Japanese startup Digital Grid.

Increasing demand for power in Africa

Image credit: Digital Grid

The world’s population marked 7.3 billion as of 2016, and 1.2 billion people among them are living without electricity, whether they like it or not. Among 900 million people living in Africa, 6.3 million people cannot even access electric power. This is due to poor cost-effectiveness of power grid development resulting from the low population density. On the other hand, the ownership rate of mobile phones of 50% across the entire African continent is unexpectedly high; almost every adult male owns a mobile phone, though the ownership ratio may differ according to local area. They go to shops located a few kilometers away from their own home that avail power equipment, where the mobile phones can be recharged almost everyday. Such scenes may be unimaginable in advanced countries where power is available with a touch of a button, but that is many Africans’ everyday life.

As for illumination at night in such areas, kerosene lamps are mostly used. Since these lamps oftentimes generate soot from low-quality fuel, leading to respiratory illnesses, thus ranking in as a global social problem. According to World Bank’s survey, it is estimated that women or children living in these area inhale kerosene lamp soot indoors equaling smoke from as much as 40 cigarettes daily. In addition, there are many people who suffer from serious burns due to overturned lamps.

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Digital Grid aims to solve these social problems through its service Wassha, which networks small-sized kiosks (or should they be referred to as jacks-of-all-trade) found in all African villages.

Digital Grid CEO Satoshi Akita and marketing staff of Wassha in Tanzania

Digital Grid installs solar panels or battery units in the kiosks, and provides 30 LED lanterns, radios or tablets for rental. The kiosk owners rent these out as home electrical appliances to villagers and charges them for charging power at the kiosks. The owners settle the electricity bills from smartphones and energize charging boxes for the appliances, even collecting from each kiosk through use of mobiles. The kiosk’s income is 16% of electricity sales, and average monthly income per kiosk is about 20,000 yen (about $188).

L to R: CEO Satoshi Akita, CFO Atsuhi Shito

CEO of Digital Grid Satoshi Akita explains Wassha:

If we opened retail outlets ourselves, management would be difficult because we don’t know who the trustworthy customers are. However, such matters will not occur by joining hands with existing kiosks in villages because they know each others well. Also, retailer network expansion can take place much faster.

Digital Grid has already expanded the service to 650 kiosks in Tanzania during the first half of this year. It plans to increase the number of user kiosks to 1,700 within the year, to reach one million end-users. It has participated in the Spring 2016 Season batch of Orange Fab Asia, and intends to develop service in west Africa including Senegal through support from Orange, the carrier providing telephony or mobile settlement service in such African countries.

Extension of powered area coverage as a virtual ‘surface’ can be realized without placing lines like those of the power grid, but rather through networking of kiosks with solar panels posited as ‘dots.’

No regulation for power business in Africa

Image credit: Digital Grid

Digital Grid had originally spun off from a research effort on ‘power network innovation (digital grid)’ by Prof. Rikiya Abe of the University of Tokyo. The concept of a digital grid is similar to the process in which the voice communication method using telephones has changed from landline to the mobile network or VoIP (Voice over IP), for example. As deregulation of electric power has commenced in Japan, ordinary households can now purchase electricity from any electric power utility, just by setting up smart meters.

Beyond the deregulation of electricity can be found the Smart Grid and beyond that, the digital grid. Over the digital grid, a device called the digital grid router – which is just like the router for packet switching in data communication – is used, providing for intelligent routing between power suppliers and consumers.

Demonstration tests will be needed before the digital grid is realized, but there are many constraining conditions upon the testing of new technologies in advanced countries, where a stable power supply is mandated. So it is that Wassha had found its way to Africa, burdened with poor power supply. Although today’s Wassha contains little of the original digital grid concept, we cannot rule out the possibility that the disruption in the mobile communication field may parallel that in the power supply field when Wassha plays comes to play a central role on the African continent, as mentioned in the introduction.

Wassha not only supplies power but changes lifestyles

Image credit: Digital Grid

Since its launch back in 2013, Digital Grid has fundraised a total of 900 million yen (about $8.6 million) 800 million yen (about $7.6 million) from The University of Tokyo Edge Capital (UTEC), Development Bank of Japan, Innovative Venture Fund (jointly operated by NEC group and SMBC group) and J-Power, and has already closed its series B round series A extension round. With recommendation by UTEC, the team is going to participate in Stanford University’s accelerator program StartX as the first startup from Japan.

In addition to the power supply business, Digital Grid is thinking to develop various other businesses, such as remote healthcare, telemedicine, test marketing, financing, remote education or cold supply chain at kiosk shops by leveraging its network. It will showcase its service at Viva Technology Startup Connect being held from June 30 to July 2 in Paris, so please check it out if you are interested.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy