Electrifying Through Pay-as-You-Go Solar: Nate Heller’s Path to Social Enterprise
On February 12, 2020, Yale SOM’s Social Impact Lab welcomed Nate Heller ’09, co-founder and COO of PEG Africa, a solar energy company that uses pay-as-you-go financing to increase access to solar energy. He shared with the audience the history and general ups and downs of his venture before connecting his story to some broader lessons he’s learned about social enterprise work.
Mr. Heller set the stage with the context of household electricity in West Africa: 30 million households do not have electricity and instead rely on other energy sources, mostly kerosene and batteries, to charge their phones, light their homes, and for other energy needs. Solar energy is thought to be a “leapfrog” technology, allowing households to access electricity long before the government reaches them with a traditional electricity grid. However, the up-front cost for solar panels and lights often makes them inaccessible to many West Africans.
Through PEG Africa, individuals pay a deposit for a solar kit which includes a solar panel, a battery, four lights, a fan, a phone charger, and a television. The company receives payments through a mobile money platform and, until the unit is fully paid, has the ability to turn off the battery remotely if a payment is overdue. These two features allow the company to make loans to individuals who don’t yet have a record of credit worthiness – a recent survey suggests that 70-90% of PEG Africa customers are receiving their first credit ever. This important feature of their impact wasn’t realized until it became clear that traditional microfinance institutions weren’t set up to meet the specific needs of financing solar energy at the household level.
Growing a Social Enterprise
Mr. Heller laid out a compelling case for why PEG Africa has done so well, why solar energy has the power to provide both energy and credit to those in West Africa without electricity, and why we can all learn more generalized lessons about social enterprise. He discussed the reasoning for PEG Africa’s for-profit status, the risky path of a social entrepreneur, and the importance of company values on scalability.
While hybrid and for-profit models have recently become more embraced to address social issues, that had not always been the case. Mr. Heller described feeling just as mission-driven at PEG Africa as he did at his previous stints in the non-profit sector; in fact, he argued that social services that people are already paying for, like energy, may be best sold through a for-profit model. Such a model allows for closer alignment to the needs of end-clients because they are paying customers and for more rapid scaling of a model that works because it provides a return on capital. While it might not be the right approach for all social impact challenges, it is certainly working for disseminating solar kits in West Africa.
Aside from operational strengths—like using mobile money payments or the ability to “lock” the battery remotely—that have led to PEG Africa’s ability to grow, company values and culture have played a role in PEG Africa’s ability to innovate and scale. Mr. Heller underscored the importance of investing in people (Mr. Heller described that “People Make PEG”). Because of this approach, employees have more ownership of their work and can provide flexible and innovative contributions as the company grows. Without creating an environment of high-quality service for both employees and customers, Mr. Heller argued, PEG Africa would not be as competitive as it is today.
Nate Heller left the audience with a lesson for venturing into the world of social entrepreneurship – be ready for a long period of wandering in the wilderness. For him, this walk has paid off with personal success and impact, but it is not a path for the risk-averse. He detailed his journey post-SOM, including fellowships he didn’t get, visas that were denied, start-ups that didn’t work, funding that almost lapsed, and eventually the perseverance, risk tolerance, luck, and flexibility that helped him find success providing access to energy for the electricity-poor in three West African countries.
By Sarah Thompson ‘21