Act-If Electropower

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Overview

Pursuing lighting for underserved communities through optimal energy efficiency, local technological development, and quality job creation

 

Overview

Headquarters: Mexico City, Mexico
Established: 2006 (no longer in operation)
Impact Areas: Mexico, Central and South America, Southern Europe, USA
Type: For-Profit
Energy Sectors:
Business Model Types:
Staff Size: 13
Annual Budget: $600,000
Major Funders: Self-funded,
Seed capital loan from Mexican government
Awards: Santa Clara Global Social Benefit Incubator 2010

ABOUT

Act/If sold solar powered and energy efficiency products, the two primary ones being solar powered streetlights and solar generators for tortilla makers.

 

Energy Products/Services

  • Solar Powered Streetlight
  • Solar Generator for Tortilla Makers

Target Market

  • Solar Streetlights
    • Small town governments in the state of Chiapas and some larger urban projects
  • Solar Generators
    • Small-scale tortilla makers in the state of Puebla

 

Act-If Electropower

Revenue Streams

  • Sale of solar streetlighting systems to city governments
  • Sale of solar power generators to tortilla factories
  • Other products and services

Value Proposition

  • Act-if not only developed and manufactured their own products, but they also lobbied federal and state governments to subsidize them for customers, which made the difference in products’ affordability for small towns and small businesses.

Problem Addressed

  • Many slums and rural towns in Mexico have either no adequate public lighting or no lighting at all.
  • Numerous studies have linked this to higher crime rates, lower productivity and other safety risks.
  • Installing public lighting is normally too expensive an endeavor to be self-financed by underserved communities and local governments often cannot access the resources to finance them.
  • In addition, diesel fuel for small business infrastructure is expensive and financing is difficult to come by, which raises product prices and keeps businesses from growing.

Where They Are Now

Impact to Date

  • Act/if delivered lighting to 30  communities in Chiapas, serving 17,000 people.
    • Crime decreased 30% in one community simply because trouble spots were lit by Act/if lights.
    • Economic activity also increased in areas with more light.
  • Act/if also sold 50 solar tortilla machines in 2010, which reduce users’ electricity bills by 40-60%.

 

Milestones

  • 2007: Received seed funding from a government loan
  • 2008: Began producing solar LED lamps.  Initially sold in smaller towns, where it was cheaper to install stand-alone solar streetlights than to wire lights to the grid.
  • 2009: Sold 200 lamps to rural community of Nuevo Grijalva in Chiapas
  • 2010: Began selling solar generators for tortilla producers and installed 400 solar lamps in Parco Chapultepec, Mexico City

How They Deliver

Product Sourcing & Design

  • Act/If was open to investment from the right investors, primarily VC type capital interested in equity with a 5 year exit horizon, and believes it could deliver a return of 30%.
  • To scale up Act/if needed an investment of US$2-3m.

Distribution

  • Solar Streetlights
    • Sold to city governments through direct sales on a contract basis.  Act/if did all installation itself.
  • Solar Generators
    • Sold to small scale tortilla makers in the state of Puebla by advertising the product and the available government-subsidized loan.
  • Act/if was involved in installation but not maintenance.

Marketing

  • Act/If’s marketing was primarily relationship based, and pitched not only toward buyers but also toward governments to subsidize their products.
  • Act/if had a partner organization, a US subsidiary called EnviroProcess, which did most of their marketing.
  • Act/if saw its niche as offering products of quality comparable to those of European companies at a price comparable to Chinese companies.

Revenue & Affordability

  • Solar Streetlights
    • Sold to city governments with pre-negotiated funding from the federal government.
  • Solar Generators
    • Sold to tortilla companies with a pre-negotiated government subsidy/loan.
      • Any tortilla maker applying to the Puebla government for a subsidized machine would receive it, and Act/if was the only supplier in the program.
      • Buyers received 50% of the upfront cost free from the government, and had to pay the rest back over 2 years at a 1% interest rate.
      • With the amount they saved on their electricity bills, this paid for itself in 16 months.
      • Buyers needed the government subsidy because it was impossible to find a bank loan for the up-front cost of US$4,000, and even if possible, interest rates would be a prohibitively high 20-24%.

Financing

  • Act/if received a small soft loan from the Mexican government in 2009
  • Otherwise Act/if has been privately funded through the founder’s personal savings and what the founder calls 3F- family, friends, and fools.
  • Act/if became cashflow positive in 2010 from sales but had not covered its initial startup costs.

Government Relations

  • Act/if’s business depended on government partnerships, sales to city governments and subsidies to buyers from federal and state governments.
  • Greenness is a trend in Mexican government infrastructure spending, so there were lots of new projects and a great deal of competition.
  • Act/if was very successful in lobbying the government to support their projects, but bureaucracy can be a challenge because too many people need to be brought to agreement.
  • Act/if also found success because products such as streetlights are highly visible and therefore help politicians get votes.

More Resources

Online Resources

Contact Information

Act/if Electropower
Calle Zacatecas No. 130
Col. Roma
México D.F.
( +(52-55)5025-6189
* ventas@actifpower.com