January Entrepreneurship Forum and Launch of World Bank's Negawatt Challenge at iHub - Nairobi, Kenya

1. Entrepreneurship in Energy and Energy Efficiency:
Opportunities, Pitfalls, and Successes, in Kenya and Beyond
Dr. Jay Taneja
Research Scientist
IBM Research – Africa
taneja@ke.ibm.com

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Outline of Today’s Talk
• Background on energy and key concepts
• Electricity supply in Africa
• Important trends in the energy industry
• Energy entrepreneurship – pitfalls, opportunities, and examples

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Energy and society
• A critical input to growth and prosperity
• The electric grid is the most significant engineering achievement of the 20th century
• An old and slow-moving industry – primed for disruption by IT
• Enormous investment happening on the continent (USAID Power Africa, etc.)
• A key driver of climate change – how can we improve energy access and quality while
avoiding catastrophic climate change?
– China and India adding on average four coal plants per week
– U.S. consumes 20%+ of oil, but has only 4% of world’s population

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Some useful jargon and concepts in energy
• Energy vs. Electricity
• Energy (Joules/kWh), Power (Watts), Current (Amps), Voltage (Volts), Frequency (Hz)
• Electricity: Alternating Current vs. Direct Current
• Renewable vs. Non-renewable
• Energy efficiency and energy conservation
• Smart grid vs. Not-so-smart grid
• Smart meters / Advanced Metering Infrastructure (AMI)
• On-grid vs. Off-grid, electrification
• Urban and rural

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5"
Baseline(+(Dispatchable(Sources( Oblivious(Loads(
Communica+on"
Non9Dispatchable(Sources(
Communica+on"
Supply9Following(Loads(
Transmission"Genera+on" Demand"Distribu+on"
Towards an aware/smart electricity infrastructure
(Source: David Culler)

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How is electricity produced in African grids?
0%
20%
40%
60%
80%
100%
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
%ofElectricitySupply
Nuclear
Coal
Natural Gas
Renewables
Oil/Diesel
Hydro
0%
20%
40%
60%
80%
100%
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
%ofElectricitySupply
Nuclear
Coal
Natural Gas
Renewables
Oil/Diesel
Hydro
Kenya Nigeria
(Source: The World Bank)

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Rural and urban electrification disparity
!
20$30%!electri-ication!
in!Sub$Saharan!Africa!
(~600!million!lack!
access);!rate!varies!by!
country!and!by!source!!
!
Challenges: low
population density,
varying fuel costs, grid
connection costs,
demand outstrips supply
Rural Electrification Urban Electrification

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An industry view: the electricity ecosystem in Kenya
(Source: Henry Gichungi, KPLC)

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Trends in energy and electricity
• The rise of natural gas and renewable generation
• Emergence of demand-side grid resources
• Enormous fluctuations in oil prices
• Big investment into more generation, but for whose gain?
• African grids not expanding quickly enough to improve access
• Plummeting cost of solar and associated installation costs
• Solar home systems powering AC and DC appliances
• Batteries becoming affordable, and replacing diesel
• Potential for microgrids for increasing electricity access and reliability

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Scaling of technologies
(Source: Arun Majumdar)

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Outline of Today’s Talk
• Background on energy and key concepts
• Electricity supply in Africa
• Important trends in the energy industry
• Energy entrepreneurship – pitfalls, opportunities, and examples

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What is a startup?
Definition: A startup is an organization formed to search for a repeatable and
scalable business model.
“Success consists of going from failure to failure without loss of enthusiasm.”
Winston Churchill
(Source: Steve Blank - http://steveblank.com/2010/01/25/whats-a-startup-first-principles/)

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Data Sources
• Twitter
• Power Meters
• Mobile Phone Chargers
• Reservoir and Power Data
(Kenya)
(Source: Javier Rosa, UCB)
Problem: electricity outages
• Spatiotemporal distribution, driven by power
shortages, weather, operations, more?
• Predicting outages is difficult, predicting
outage risk may be more realistic
• Benefits: Guide utility upgrades/repair/
maintenance, inform consumers of outages

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‒ API!for!change!in!power!state!(BatteryManager)!
‒ GPS!for!localization!
‒ Accelerometer/microphone!for!false!positive!detection!
‒ Microphone/API!for!AC!mains!detection!
‒ Smart!meter!bene-its!at!a!fraction!of!the!cost!
!
!
Smart
Phones
Possible solution: collecting outage data from mobile phones

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Potential business models
• Sell data to utilities
– Pros: Simplest business model – interested in reducing operations cost and improving service
– Open questions: How to distribute software? Why will end users install? What extent of coverage?
• Sell predictions to electricity consumers
– Pros: More potential customers, possible benefits from network effects
– Open questions: To whom – residences, businesses? Are outage predictions useful? What is the benefit
of using phones over existing products?
• Sell predictions to telcos/tower companies
– Pros: Huge consumers of energy with potential to optimize, could partner to sell data to utilities
– Open questions: Are outage data already in use at tower sites – can this be done in software? How does
maintenance work?

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‒ API!for!change!in!power!state!(BatteryManager)!
‒ GPS!for!localization!
‒ Accelerometer/microphone!for!false!positive!detection!
‒ Microphone/API!for!AC!mains!detection!
‒ Smart!meter!bene-its!at!a!fraction!of!the!cost!
!
!
Smart
Phones
Feature
Phones
‒ Single$use!device!plugged!in!with!no!battery!
‒ Localization!done!a"priori"
‒ Dedicated!application!periodically!reports!presence!
‒ Absence!indicates!power!outage!
‒ Introduced!after!-inding!“holes”!in!smartphone!monitoring!
Possible additional solution: not only smartphones

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Pitfalls
• Not understanding your customers
• Improperly identifying your competitors
• Not considering competitive advantages
• Taking too long to test an idea, or failure to measure your tests
• Focusing on the wrong opportunities – too little impact or too small of a problem
• Devices – challenges of manufacturing, maintenance, and cost
• Crowdsourcing – challenges of bootstrapping, incentivization, and data quality
• Partners – challenges of motivation and competition
Trust (your intuition) but verify (its relevance and scale)

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Energy + IT startup examples
(Ukraine) / (Brazil) – uses single hardware device to monitor
residential mains electricity, discerning all individual appliances and recommending
conservation/efficiency measures
(USA) – collaborates with utility to monitor customers’ smart meter data to
recommend conservation/efficiency measures
(USA) – uses Bluetooth-enabled sensor connected to car OBD-II port to
provide driver feedback for improving acceleration and braking habits
(USA) – connects officeworkers to building climate
management systems entirely via software to improve comfort and reduce energy

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Nest: Learning occupant patterns in the home
• Introduced in 2011, Nest is a learning thermostat
• Includes WiFi and sensors for temperature and motion
• Learns models of room and home heating, user patterns,
and energy costs
• Improves heating performance and reduces energy spent
with more experience
• Incorporates lessons learned from millions of thermostats
• Sold to Google in January, 2014, for $3.2bn
Energy and IT startups have real value.

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Questions?
Jay Taneja
taneja@ke.ibm.com