A sustainable strategic architecture for the provision of solar energy to SMMEs in Africa
Thesis (MBA)--Stellenbosch University, 2014.
ENGLISH ABSTRACT: Many rural areas in Africa still lack adequate electricity supply. This has been identified as a major obstacle to development in many African nations. The high costs associated with providing electricity through national grid systems prevent many governments from delivering electricity to remote rural areas. The purpose of this study is to define a strategic architecture and business model that can be used to provide solar energy to Small, Medium and Micro Enterprises (SMMEs) in Africa. The desired outcome is a sustainable business model for solar energy provision that can be implemented in the African context. This study uses the strategic architecture framework developed by Ungerer, Pretorius and Herholdt (2011) to achieve this. Primary data was collected through interviews with industry experts and this was supplemented with a comprehensive review of current literature. An analysis of the PV market shows that solar PV has grown significantly over the past decade and the industry is already extremely competitive. The highest competitive pressures include substitute products, high buyer bargaining because of low product differentiation, and the threat of new entrants. The industry has a clearly defined value chain starting with the manufacturing of PV panels and other systems components, but goes as far as providing financing to customers. The profit potential in the industrial and commercial segments is highest and key competitors in this segment offer similar products and services. The customer analysis showed that small businesses vary considerably in the products and services they offer and that their energy needs also differ. Services that can be offered to these customers include energy efficiency assessments, system design, pre-project services, financing, system installation and system monitoring, operation and maintenance. The organisation that will implement the strategy is a company called Solshare. The organisation identified its vision and mission, and core values and defined the domain it will participate in. The commercial and industrial segments are regarded as the most appealing segments and the core product offering is energy efficiency assessments and solar installations. This will be offered through an innovative shared-solar model that also includes system financing, system monitoring and system optimisation, and will be implemented by carefully selected partners to minimise cost. Solshare’s objective is to develop a distinctive competence in financing and implementing shared-solar projects through strategic partnerships, while providing excellent customer service. It will employ is a focused low-cost strategy by providing solar energy to small businesses at the lowest cost possible, through a shared resource approach. Costs will be managed by focusing on a core set of activities and outsourcing non-core activities. The key value proposition is the development, installation and servicing of quality shared-solar solutions at the lowest cost. The cost drivers include the costs of solar system components procured from suppliers, the installation costs, salaries, marketing costs, system maintenance, and legal fees to draw up contracts and lease agreements. Income streams include energy assessments, fees charged for site selection and procurement, the installation of systems, and the monitoring and maintenance of installed systems. The capital mix consists of 30% equity and 70% debt and organisation aims to optimise resource velocity through completing new installations within a four month period and by employing a core team of professional sales and technical staff, while outsourcing non-core processes.