Understand, Adapt and Rent to Own

by Greg Levin

Part of the beauty of EarthSpark is its preternatural shape shifting ability. The mission – eradicating energy poverty – should be and is consistent. The path to attainment needs to be flexible. If there was a definitive map, a charted course, an infallible plan to achieve energy for all…well, then it would probably already be done. But that’s not the case. We’re blazing the trail, and with expeditions come surprises. We encounter, consider, and navigate accordingly. Changing course is a good thing; it means we’re paying attention.

When the Clean Energy store opened its doors in July of 2010, it was EarthSpark’s prevailing model. Open this store, thrive, and then open more. Things happened, time passed and lessons were learned. The model changed. It evolved. Over the past 6 months we’ve shifted focus from ‘brick and mortar’ to ‘Catalog and SMS’. We’re moving away from on-the-ground retail outlets and becoming a multichannel distributor. The Enèji Pwòp brand is now more nimble, agile, light on its feet. Have renewable and responsible energy products, will travel.

As a part of that shift, we’ve also reimagined and rebirthed a “rent to own” approach. Our rental program began, much as our organization did; organically. Daily, we encounter a large potential customer base that is unable to access our products based on their relatively high upfront costs. Even though the payback period is incredibly short – for most products less than 5 months – and savings are large – upwards of 10% of annual income – getting over the initial upfront cost has been a serious hurdle. From this problem set, came inspiration, and from there this nascent rent to own model was born.

We know that in a head to head savings, quality, and sustainability ‘Energy Battle Royal’ with our competitors (candles and kerosene) we win EVERY time. The problem is that we hadn’t been able to pick a head to head fight. Candles and kerosene kept ducking us, so we decided to bring the fight to them.

If using the smallest possible kerosene lamp, a ‘tet gridap’ baby food jar with a rag inserted in the top to burn as a sooty but low-cost lamp, the average rural Haitian pays 5 HTG (12.5 cents) a night for kerosene per lamp. They don’t pay for large quantities; they buy drips and drabs each night. Call it cultural, call it inefficient, and call it reality. These people are used to an extremely small and extremely regular investment. We saw that if we wanted to compete with kerosene, we’d need to play by its rules. So we are. No need to re-invent the wheel, just put the existing one on a better product and go for a ride. We think we’ve found a sweet new ride; a project we’ve piloted that’s renting our ‘Lanp Enèji Pwòp’ at 5 HTG a night. A pilot that has over 100 bulbs being completely rented out EVERY night in Les Anglais.

We’ve been testing the approach with 3 retailers in Les Anglais, one of which is a business partnership between two entrepreneurs who are dominating the project. Wisline and Jamil are a pair of sharp twenty somethings who have teamed up to rent out the vast majority of the pilot’s stock. We started them with 12 lamps, and two weeks later they came back to us with a waiting list of 18 additional names. We upped their stock, and two weeks after that they asked for 30 more. We finally capped our stars at 77 bulbs, which they’ve been renting out in full every night since they received them. We’re thrilled by their early successes and can’t wait to see our partnership with them continue to thrive and grow.

Over the course of 4 months of rentals (120 nights) a retailer will recoup 600 HTG for their product, a full third more than what they’d normally charge. This represents an increase from a 25% ROI per lamp to nearly 88%. It also represents a large premium to the end users, but a necessary one for the retailers who are incurring greater risk by not requiring a down payment. Meanwhile, though our customer has paid a third more than they would have at retail, they’ve acquired a great product with ‘0’ down and a payment plan that did not change their daily expenditures. With no adjustment at all to household budget, they’ve acquired a product that will benefit them, immediately, in three drastic ways:

1. Health and Safety - The risk of their kerosene lamp burning their home or children is eliminated. Respiratory issues associated with the sooty kerosene smoke are no longer a concern.

2. Environment – A polluting fuel, kerosene, is replaced by a clean one, sunlight.

3. Economics – Over the first year and a half of ownership they will save 2000 HTG by not purchasing Kerosene.

The choice is a no brainer, and the math checks out. We’re scaling up, finding the right implementing partners and preparing a marketing blitz. We’ve had the goods, and we’ve had the facts, now we believe we have the mechanism by which to disseminate them both.

In his TEDx talk, THE veritable authority on the matter in Haiti, (TonTon) Dan Schnitzer, talked about the ‘Last Mile’; the final hurdle that needs to be crossed to get existent technologies into the hands of those who need them most. This is an example of that very last hurdle, and clearing it seems more and more a reality every day.

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