Forbes, by Elizabeth MacBride
CAIRO—About a half-million solar panels were installed every day around the world last year, according to the International Energy Agency. Costs for solar photovoltaics are expected to drop by 25% by 2020, making solar — already competitive — cheaper than other forms of energy in many cases.
Smart entreprepreneurs will get ahead of that curve. In Cairo, I met the CEO and chief architet of a company, Karm Solar, that has been in the forefront of solar since 2011 — back when solar was in the doldrums. I first read about Karm Solar in Startup Rising, a book by U.S.-based venture investor Christopher M. Schroeder.
Karm Solar has come a long way since then. Now that the company has recurring revenue that comes from its construction of solar power stations and sale of the power, Ahmed Zahran said he expects the company to be profitable this year. It’s the only company in Egypt with a license to do those installations; Karm then sells power to businesses. It also leases solar power installations, working with EFF Hermes Leasing to set up financing for customers.Karm Solar, which now has 52 employees, aims to raise $70 million from institutional investors this year. It's a model of one method of scaling up: by diversification.
Back in 2011, Ahmed Zahran, 36, couldn’t get his employer to invest in his idea for solar-powered water pumps. They seemed a no-brainer to him in the Egyptian desert, where there is a lot of water under the ground and plenty of sunshine on top of it.
So he and about half a dozen co-founders, raised money from 20 angels, in increments ranging from $10,000 to $1 million. They looked for people who could give them advice as well as cash.
Along with branch of the company producing the water pump — the revenue generating arm, with eight clients — the company has a design/build branch focusing on eco-friendly structures. It recently completed a $1.1 million workers’ village in the desert for an herb farm. Built with local stone, the village is carbon neutral. “We reduced the amount of bricks and construction by 85%,” Zahran said.
It uses 78 kilowatts of solar power. “Cooking is the only thing that runs on natural gas.”
Making solar panels pretty
“How we design buildings matters,” said Karim El Kafrawi, principal architect. “If we can design them in a more eco friendly way so we can reduce our reliance on artificial cooling and heating, it’s easier to supply entirely with renewable energy.”
Karm Solar also hoping to put a new spin on solar, making it attractive. In this, they’re following the lead of Elon Musk, who has introduced solar panel roof tiles. But the Middle East doesn’t have pitched roofs — which means it needs a different approach.
“One of the obstacles to solar panels is the looks,” said El Kafrawi. “Designers are reluctant to incorporate panels.”
With an alliance with an woman-owned Egyptian design brand, Azza Fahmy, which will help it design buildings and solar mountings, Karm Solar hopes to change that. "The first building "Azza Fahmy Building" will actually be the KarmSolar Campus in Sahl Hasheesh (south of Hurghada) where we will have our R&D and part of our operations," Zahran said by email.
Though he is aiming high, Zahran is realistic about the challenges that face his company. So far, it’s been lean: It’s burned through $7.5 million to get to profitability, a small amount from a world point of view, but much larger, of course, in Egypt. The financing has been half debt and half equity. But Egypt has its upsides, too, starting with the size of the domestic market of 90 million.