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I take for granted that I can walk away from my microphone right now, head over to my kitchen and turn on my stove to boil water, bake a cake or cook myself a meal. And, I don’t even think about the fact that I have hot water available on demand at any time of the day. I just turn on the tap and its there.
This is not the case for millions and millions of people throughout the world. In fact, there is a huge portion of the human population that still relies on burning wood, or charcoal, for cooking and cleaning. This dependence is a massive time suck away from other productive tasks and, as we’ve heard on other episodes, a considerable health risk.
My guest for the 179th Terms of Reference Podcast has a better idea that he hopes will end the use of charcoal. Dr. Sebastian Rodriguez-Sanchez is the CEO and Co-Founder of KopaGas, a technology solutions provider of Advanced Metering Infrastructure for energy utilities. KopaGas has developed and deployed the first commercial pay-as- you-cook platform for propane.
I’m positive you’ll love this episode where Sebastian and I discuss why propane is a powerful replacement for charcoal, how he company sell and manages their smart meter system, what it takes for a family to make the change to gas and much more.
You can connect with Sebastian here:
IN TOR 179 YOU’LL LEARN ABOUT
- Kopagas, a company that, despites its name, should be thought of a “logistics, supply chain and tech” before an energy or a gas company.
- The opportunity of delivering cylinder gas to Africa, considering the requirements and safety compared to existing and competing forms of cooking energy
- How African customers cannot measure the losses from continuing cooking with coal, as it is an unmeasured expense of effort
- How better energy sources influence positive habits, like nutrition or education
- How an optimal domestic energy solution in Africa must put a lot of consideration on the customer financing
OUR CONVERSATION FEATURES THE FOLLOWING
Names:
- Kopagas
- Impact Fund
- Tanzania’s Minister of State for Environment
- GSMA’s Mobile for Development
Topics:
- Cooking energy, Gas, Charcoal
- Liquefied Petroleum Gas (LPG)
- Energy Logistics, Cylinder-based Gas Delivery
- Energy Safety
- Electrification
- Digital Payments, Cryptocurrencies
Places:
- Tanzania
- Brazil
- Mexico
EPISODE CRIB NOTES
Download an automated transcript.
Rain season
02:37
Kopagas does tech, supply chain, and gas
“A technology and a logistics company”
Energy
Cooking energy
Cooking gas: propane, butane. Cyllinder, bottled
Fairly cost-effective, safe, easy to transport
Popular worldwide
For Africa it’s ideal, still undeveloped
It takes less infrastructure, some thought, that’s not there
Too many African kitchens still run on charcoal
It does take a little infrastructure, but afterwards it is highly cost-effective, safer than charcoal
23% cheaper
04:12
Do people know they desperately need gas?
“It’s early day”
Over 5% of the population have access
People in rural areas may never know it exist
They can go to the woods and chop some
They spend a lot of their income on energy though
Gas addresses a basic need
The charcoal, wood methods are centuries old, inefficient
Gas releases no pollutants, unlike charcoal
06:10
But this is not a gas, rather a “tech and logistics” company
Gas wasn’t on Sebastian’s radar first starting up Kopagas
“People like to know they can afford new, better things”
Kopagas model has no upfront costs for the customer
(There are individual upfront costs)
Incremental payments structure over the cost of 2 years
At the beginning they pay back the infrastructure each time they buy gas
And a new customer means it will stay a customer for a long time
People buy via mobile payments
“Pay-as-you-cook” marketing
Kopagas is advertised through networks
Women networks are high contributors, they make each other aware of the benefits of gas
Groups also help people pay on time
Groups and mobile wallets are winning combos, proven in electricity, water
People quickly adopt gas, become more confident
With other methods they have to plan, cook large amounts, eat the same thing many days in a row
With gas cooking is simpler and varied, “more spontaneous”
Impact Fund documents new behavior, qualitative
Propane fuels a billion homes worldwide
Big in Latin America, where Sebastian is from
“It is the fuel of choice”
11:50
Above 100% retention rate
“We have more demand than that with which we can keep up”
Another line sells gas to businesses, it’s currently the main source of revenue
Gas has greatly increased quality of life
“We continue to find ways to improve the use of gas”
The goal is to achieve 100% share of energy consumption with gas. It will take a few years
13:17
How about the pushbacks?
Entrenched behavior favor charcoal
A continuous tailoring of offers, payment options
Warm showers is a big selling point for men
Tanzanian co-founder
He was well off, top 5% income percentile in the country
It was difficult even for him to find a steady supply of gas, especially in extraordinary circumstances
Kopagas: long term investment in gas cylinders, stoves
Special equipment required authorized personnel to manage, open and close the tanks
“Stick and carrot in the system”
Cylinder is removed from the picture
Lots of bad cylinder practices, like not being filled at full capacity
Another investment was the distribution networks
Cylinder lasts for 3 weeks
20:19
LPG Cylinder Research & Development, Automated, Digital Systems
Kopagas’ focus was to rethink the value chain
From the bottling and warehouses to the distribution to the maintenance
Special software tools, GPS
Looking to become cashless
Previously the team was involved in smart meters
Price of gas remains low
Thank ~fracking~ the shale revolution
“We have some brilliant Tanzanians”
Digital building blocks, including payments, become more accessible over time
25:13
The big, 5-year challenge is logistics
Tanzania is huge
Most people are disperse across rural areas
Gateway to Lake countries
The grid does not make it there
Gas cylinder delivery often follows dirt paths
Before venture capital gets more excited, a “little grid” is in the works
It will help on gas delivery
Homes spend a long time sourcing wood and charcoal, but they don’t see it a cost as they don’t have to pay
The vision: accelerate transition
Lower costs, overinvest, on cylinders
Low-level investments tend to come with inefficiencies
Better capital endowment helps manage risks better
“Cylinders are cheaper than pipes”
Mexico decided not to go ahead with pipe infrastructure
Bottling facilities are tricky, but a good investment
Infrastructures might be less costly than solar, even help fund the development of renewables
It’s been similarly done on Latin America, Asia
30:47
Predictive analytics for the soul
“The cylinder is very humble”
Tanzania’s Environment Minister is supportive
Current campaign against charcoal
Not so vocal about gas, but the advantages are evident
Vast deposits of gas discovered recently
It will lower the cost keep down
Can the cylinder become as sexy as electricity?
Scantily cost set-up project could do the trick
Brazil is doing interesting things in terms of government sponsorship
Technologies are also showing efficiency gains
New financial tools help spread the service further
Kopagas adds assurances for investors and customers, to help track, for value an accountability
34:15
Funding
After the friend bootstrapped it, GSMA a association jumped on board
They are interested to sort issues to deliv00:00 er more value-added services
35:10
Belles of Sebastian
China – without whose people Kopagas might not have been possible
Cryptocurrencies
Electrification
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