It takes a lot of courage to delve into a capital-intensive industry such as offgrid power. For German expat Daniel Zywietz, founder and chief executive officer of Enerwhere, this necessitated extreme measures such as going out to the desert and counting diesel generators.
“That sounds silly in the 21st century, but there wasn’t a lot of secondary research you could get on the offgrid power sector. What we did was literally primary research,” he said.
Zywietz arrived in the UAE in 2008, where he worked as a consultant at Masdar and on other renewable energy projects in the region. He soon realised that the ambitious plans for clean energy were moving slowly, impeded by low electricity prices.
“Our conclusion was that few things worked because energy was fairly subsidised in the UAE at the time, except for diesel fuel, which was subsidised in Abu Dhabi but not in Dubai.”
Searching for economically viable applications for solar energy, he found that dozens of remote places in the UAE, including labour camps, construction sites and islands, were running on diesel at a cost up to 10 times higher than subsidised grid-electricity prices.
Seeing the opportunity, Zywietz established Enerwhere in Dubai in 2012 to bring solar-diesel generators to customers without a stable grid connection. The hybrid systems combine the low costs and environmental benefits of solar energy with the reliability of diesel generators or batteries to deliver round-the-clock power.
“We didn’t think, ‘This is a technology, how are we going to sell it?’ We thought, ‘Here’s a market, namely expensive energy from diesel generators. Which technology do we need to replace this with renewable energy?’ It was much more market-driven than technology-driven.”
Nevertheless, statistics on the sector were almost nonexistent, and the little data that was available was privately held by oil companies. Zywietz was left with no option but to carry out field research himself.
“We knew quite a bit about the structure of the power market but the off-grid sector was unregulated and very poorly mapped out. Given the scarcity of data, primary research is still one of the main ways we gather information.”
Then came the cost challenge of starting up. While running a business in many countries can be done from one’s home or garage, in the UAE companies cannot operate from a residential building.
“We were in a business centre and tried to keep our overheads low. You must focus the money on things that are important to your business; in our case it was the solar equipment. But we had to have an office as it’s illegal in the UAE not to have one. We didn’t actually need an office because our solar plants are out in the desert.”
Securing a bank loan was another roadblock, leading the founder to equity-finance the business through seed and angel investors, mostly people from the industry who recognised the increasing demand for off-grid energy solutions.
“We had to wait three years until banks would even talk to us. Now our trade licence is three and a half years old and I’ve been a customer with our bank for much longer, but getting a loan is still difficult. Even when we got an offer, the interest was as high as 23 percent.”
In January 2017, Zywietz succeeded at raising AED1 million via crowdfunding platform Beehive, which has facilitated AED68 million in funding since launching in 2014, according to its chief marketing officer Francesca Moore.
“That was a pleasurable experience. It’s not particularly cheap as far as financing goes but at least it’s available.”
Zywietz applied for the loan with an 18-month tenor using Beehive’s 14-day reverse auction system, where investors bid against one another to fund an investment request, driving down the interest rate.
Like others in the industry, Enerwhere benefitted from the price drops of solar equipment, which have fallen by around 70 percent since 2012, and 90 percent since 2008. This enabled the company to expand to northern Nigeria, where it has opened an office and signed contracts for two projects.
“We’ve got ambitions across the Middle East and Africa. In the UAE, we cover the entire country, from Sir Bani Yas in the west to Ras Al Khaimah in the east.” Enerwhere was also among the first companies to be certified by Dubai Electricity and Water Authority to carry out solar system installations under the Shams Dubai initiative.
“We’ve signed several megawatts of solar-rooftop projects and we’re one of the top five players in that business in Dubai. By the end of 2017, we will have completed 20 projects with a total power capacity of around 20 megawatts.”
Zywietz believes that the solar market will continue to grow, though the pace will depend on various factors such as electricity price increases or regulations getting easier, which would help propel the market.
“Abu Dhabi announced a rooftop programme and Oman is talking about a similar initiative. There are many regulatory changes to come, it’s just difficult to predict how soon. Generally, we’re positive. We have 45 employees today versus 25 a year ago so we’re growing rapidly.”
His advice for other entrepreneurs? Get the minimum viable product out there and optimise once you’re up and running rather than spend years optimising without ever talking to a customer. “A lot of learning at the end comes from being out there and customers telling you what’s good and what’s not. You could be forever refining things.”