Last Mile Electrification and Energy Access in Mexico with Manuel Wiechers (Iluméxico)

Jul 2, 2020

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In this episode, we speak with Manuel Wiechers from Iluméxico about last mile electrification in Mexico. We discuss the challenges of providing energy access to remote communities in Mexico and Latin America, the regulatory setting for energy in Mexico, the challenges for the off-grid sector in portfolio management, and their shifting business model to a servicing and PAYG model.

Recorded in June 2020

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Show notes:

(1:30) How Manuel got into the energy and solar sector; how he started Iluméxico after working at GE's wind division

(5:00) Energy access and electricity sector in Latin America, how the market differs from the energy needs in Sub-Saharan Africa and Asia

(7:15) Iluméxico's business model and product offerings:

Tier 3 & Tier 4 solar home systems for households, large energy systems that can be upgradable

Last-mile service company, with a utility business model

PAYG payment options in remote regions without connectivity requirements

Remote monitoring capabilities for energy systems

(13:10) Their decision to develop their own hardware and software solutions, or to partner with other providers; the development of their new product, El Colibri

(18:00) Their progress to date, and the impact on customers and communities; their rapid scale in the past two years, installing over 24,000 systems; their partnership with government to reach last-mile customers; productive energy use and benefits of electricity

(23:00) The benefits and drawbacks of working with government agencies: the ability to reach customers more quickly, subsidising the cost of solar systems, the emphasis on development but poorer payment rates. The actions of recent government policy changes in the energy sector, and the impact on Iluméxico

(29:00) The progress towards 100% electrification in Mexico by 2025

(30:45) About rural, remote communities in Mexico; low income, primarily indigenous communities; their current reliance on diesel and candles

(33:40) Their experience in the Colombia; their work in Colombia with higher energy users

(36:20) The need to build trust with rural communities; not taking any payments until devices are installed; avoiding affiliations with political entities

(39:10) The biggest challenges within the off-grid energy sector (there are many!); the need to focus on portfolio management, ensuring high repayments from customers

(43:30) Financing for Ilumexico, between debt, equity and grants; the unsuitability of VC funding in many contexts; the need for grants and subsidies to reach some of the most remote customers

(47:00) How to ensure higher customer repayments; looking at data (but with limited results); customer segmentation and ensuring high quality customers; focus on service provision; the need for flexible payments

(51:30) Their work around productive energy use: providing refrigeration services; agri-processing; connectivity; schools and health clinics

(53:40) Their goals for the coming years: looking to expand to other countries in Latin America, other last-mile electrification opportunities even in the USA

(56:50) Where the name Iluméxico comes from

(59:15) What Manuel does when he's not working

(1:03:00) Nancy Wimmer's Green Energy for a Billion Poor

(1:04:00) Advice for an entrepreneur or investor

(1:05:00) Predictions for the next 3-5 years: the significant impact of failure in the off-grid sector, the challenge of proving the off-grid business model; the potential for the future through partnerships