Business Plan€¦ · Web viewAll marketing is currently done through face to face, cold calling and word of mouth channels. At this stage there are no plans for marketing campaigns

Business Plan

Energy Assessment - Timor-Leste

December 2017

Team leader: Nicolas Makram

Group Leader: Alex Piatek

Trekkers:

Henry Andresen - Bachelor of Engineering (Environmental)Mason Bierlein - Bachelor of Law / Bachelor of Economics (Advanced)Thomas de Heus - Bachelor of Engineering (Mechanical and Sustainable Energy)Ben Disher - Bachelor of Engineering (Civil and Environmental) / Bachelor of FinancePatrick Edwards - Bachelor of Engineering (Mechanical) / Bachelor of FinanceDavid Gailey - Bachelor of Engineering (Mechatronics) / Bachelor of CommerceJunwei Huang - Bachelor of Engineering (Mechanical)Alexander Teicher - Bachelor of Engineering (Mechanical and Aerospace)Isaac Walton - Bachelor of Engineering (Mechanical)

Table of Contents

1

1. Executive Summary

1.1. Business Summary

1.2. Goals

1.3. Financial Summary

2. Ownership Structure

3. Products and Services

4. The Market

4.1. Medium to Large Business

4.2. Education

4.3. Military

4.4. Rural Areas/Farms

4.5. Government

4.6. Sales

5. Market Research

5.1. Research and Empathising

5.2. Needs and Wants

5.3. SWOT Analysis

6. Marketing Strategy

6.1. Brand

6.2. Channels of Communication

7. Competitor Analysis

8. Operations and Logistics

9. Cost and Pricing Strategy

10. Financial Analysis and Reporting

11. Contingency Planning

12. References

13. Appendices

1. Executive Summary 1.1 Business Summary

© XYZ For Good Pty Ltd T/A Project Everest 2016 2

Project Everest has the purpose of providing clean, renewable energy to people in Timor-Leste.

Currently in Timor-Leste there is an unreliable grid, powered by diesel generators at the main

plant in Hera. Electricidade De Timor Leste (EDTL) currently runs these generators at cost of

USD$105 million per year, yet only make USD$28 million per year from electricity bills being

paid (Collett, 2017). This in turn has led to an electricity price for large businesses of

USD$0.24/kWh. This cost is the main value proposition for Project Everest as it looks to provide

a much cheaper energy alternative in the long run. This is achieved through supplying solar

panel systems to customers through Indonesian company Sundaya and partner Hugh Collett.

The main target market is medium-large business and other power consumers such as

educational institutions and government buildings. These customers will be engaged primarily

face-to-face by Project Everest Trekkers, and later Project Everest staff, to develop a good

relationship to properly understand the customer’s needs. A tailored solution can then be

provided through Sundaya. Once customers are established, their usage data specifics will be

collected by the energy team, and this data will be passed on to Sundaya to design a detailed

system, which is then supplied and installed by Sundaya. Long term there is the aim to train

local electricians in the installation and maintenance of the solar systems to enable locals to

complete this step that would be a positive for the local economy.

1.2 Goals

There is scope to provide smaller systems to electrify rural areas with consumer-scale products

that Sundaya currently produce. The end-goal of the business is to help the Timorese

Government meet their goal of 50% renewable energy by 2030 and ideally an even higher

percentage (Republica Democratica de Timor Leste, 2011). An opportunity also exists to branch

out to other developing nations through Sundaya and their international supply chains to

countries where Project Everest already has a presence. This would be achieved by identifying

market opportunities where Project Everest can establish their own independent influence.

Receiving commission from a commission, as it currently stands with IMEX Tropical, is not the

most sustainable long-term business plan and should be used as a stepping stone only. The

business should be constantly looking for opportunities to establish an independent and

competitive product or service. Another goal of the business is to provide social benefits in line

with Project Everest’s ethos, with one area specifically for Timor-Leste being education. Several

options exist for partnerships with universities and technical colleges to train students in the use


and installation and maintenance of solar panels, increasing the skills of the local labour force

while simultaneously increasing broader awareness of solar panels and renewable energy.

1.3 Financial Summary

Revenue would be gained on a commission basis through Hugh Collett who receives

commission from Sundaya as their sole representative in Timor-Leste. Hugh receives a 15%

commission on each sale, of which Project Everest will get one third. Hence, Project Everest will

receive a total of 5% of the full sale value. As there is such little risk for Project Everest and

almost no capital investment required, this agreement was deemed fair. The business model

canvas is below:

Figure 1 - Business Model Canvas


2. Ownership StructureFull ownership will be Project Everest. At this stage there is no forecasted need for external

investment. The relationship with Hugh Collett is solely a business partnership.

3. Products and ServicesProject Everest takes part in the sale of Sundaya products including panels, inverters, as well as

in the future, batteries. Sundaya offer units for both individuals as well as medium to large

businesses. Larger scale systems to provide businesses with reliable power are available as

well as smaller personal-use products such as lights, chargers and televisions that require no

inverter or battery.

Products include:

● Solar systems in 8, 20 and 42kW sizes, with businesses generally requiring a

combination of more than one system, and there being the flexibility for custom systems.

● Battery solutions ranging from 30 to 300kWh storage systems. At this stage Sundaya do

not have large scale battery options and other suppliers are being investigated at a

preliminary level.

In order to keep these systems in working order and to mitigate any issues, students from the

technical college CNEFP in Tibar will be trained and used to conduct the maintenance while

electricians and engineers from Sundaya in Indonesia will complete installations. Ideally,

students from CNEFP will complete all technical phases of the business. CNEFP currently do

not run courses at a high enough level that students will understand how to install photovoltaic

systems because there is no need for this course. By hiring these graduates, CNEFP are willing

to introduce a higher level course. There was interest from Christian (see Hubspot) a Filipino

electrician who is interested in working with us and also passionate about training graduates or

local electricians to work with solar systems.

Businesses that run during hours of sunlight such as offices and schools will not require a

battery. As their energy usages will predominantly be during hours of sunlight, the addition of a

battery is unnecessary and only adds a much higher additional cost. Businesses that will require

a battery include supermarkets (cold storage) and hotels (peak usage is predominantly during


the night). As aforementioned any battery systems at this stage will need to be fully coordinated

by Project Everest.

4. The Market4.1 Medium to Large Business

Many medium to large businesses have shown interest in buying panels, such as Heineken,

Plaza Hotel, The Spa Associated Cafe, Hotel Audian, JYL Building Company, and East Timor

Trading (ETT). These are all relatively large established businesses in Dili. They have the

capital to buy large systems and batteries upfront and recognise the benefits of solar power.

These businesses are the best option to gain profits before expanding out to other sectors and

regional areas which may not produce great profits with our 5% commission.

4.2 Education

Schools and Universities have shown interest in our product such as the Dili Institute of

Technology (DIT) and CNEFP, as well as Dili International School and QSI International School

of Dili, which were contacted by Hugh Collett. These customers are interested in solar panels

for the potential electricity bill savings, for their environmentally friendly generation of electricity,

or simply for their students to learn off. Especially in the case of CNEFP, the local technical

college in Tibar, educational solar arrays will be required in order to teach their students to

prepare them for work in the solar industry.

4.3 Military

There is potential for a partnership with the Australian Military and Navy. Interest through the

Royal Australian Navy has become apparent. Australia are gifting Timor-Leste two patrol ships

that will be used from the Hera naval base. The base does not have the current infrastructure to

accommodate these ships and hence an upgrade is needed within the next 5 years. A pitch to

the Navy in the upcoming months (most likely February) to propose the idea of putting solar

panels on the new structures is the next step that should be taken. In July, the Australian army

were contacted and also showed some interest. They required a proof of concept before

considering the idea of panels and so with the partnership with Sundaya, this becomes a viable

route.

4.4 Rural Areas/Farms


Many farmers do not have access to electricity and hence lighting, water pumps and drying

solutions are not readily available. Not having access to a pump makes it difficult for farmers to

water their crops, leading to decreased harvest. Most farmers in Timor-Leste grow maize (corn)

which is required to be dried before being eaten or sold to the markets. Empathising with

farmers showed that they often lost large amounts of rotting corn, which are generally fed to the

pigs. Current drying methods include leaving corn on the ground to dry in the sun or hanging it

over a fireplace which is not efficient. A solar powered drying method is an option to consider,

with Jan Kaliski, a friend of Hugh Collett’s, having a cost-efficient prototype of a dryer that could

be modified to use solar.

4.5 Government

The government has a reputation of being notoriously difficult to work with, thus is being

avoided during this stage of setting up the business. A substantial amount of money was spent

on electrifying Timor-Leste post-independence, including the construction of the diesel power

plant at Hera (Wärtsilä, 2017). The government are not likely to just switch to solar as this

implies the money is wasted on a power plant that is currently operating under capacity (Collett,

2017). In the future however, the government is looking towards powering Atauro island, a

project that could be completed with solar power, and which Project Everest would be very

interested in being a part of.

4.6 Sales

No sales have been made and no contracts have been signed thus far. However there has been

strong interest and enthusiasm from many businesses around Dili, with several customers in a

position to buy a solar system. It is hoped the first sale will be facilitated in early 2018.

5. Market Research5.1 Research and Empathising

Hugh Collett has done much of the logistics research and Sundaya have suppliers, importers,

warehouses and transport organised.

Empathising included visiting a variety of businesses around the Dili area as well as farms

outside the city. The interest of each business in solar was gauged, and their electricity bill

looked at, in order to determine the size of a solar system necessary to satisfy their power


needs. Electricity prices tended to vary throughout Dili with some businesses paying only

$0.12/kWh depending on ownership history of properties (McGovern 2017), significantly

decreasing their willingness to buy solar systems.

There is definitely a market opportunity in the rural and farming sectors however with many

subsistence farmers not earning money, it is difficult to sell the product to them. Thus,

partnering with NGOs is an option that is being looking into as they will have the funding to buy

the product and supply solar energy to rural farms and communities.

5.2 Needs and Wants

Empathising showed that customers tended to struggle with issues such as blackouts, damaged

equipment, wasted food, and high electricity prices. Solar panels are able to provide a

sustainable, cheaper, more reliable energy source, effectively solving all these needs. Once the

businesses have paid off their panel system (either with a payment system or upfront), all

electricity generated by the panels will be at no cost to the user.

5.3 SWOT Analysis

The following SWOT Analysis was conducted while considering partnering with Hugh Collett

and Sundaya to assess Project Everest’s position going forward. It was determined that the

partnership would be positive due to the strengths and opportunities presented below. The risks

have been discussed in the Contingency Planning section on page 13.

Table 1 - SWOT Analysis

Strengths Weaknesses

● Small payback period makes solar system cheap in comparison to EDTL energy supply

● Good solar intensity in Timor-Leste allows panels to be used effectively and efficiently, reducing payback period.

● The proposed systems and installation partners should ensure a no maintenance period of 10 years per system with that 10

● Efficiency of solar panels drops during the wet season, need to over-design system for this.

● If installed without batteries, then power is only available during daytime usage. If batteries are installed the initial cost of the system is increased

● Need to import everything as Timor-Leste does not produce solar products

● Inconsistent electrical structure means there is no code for building or electrical wiring in Timor-


years being covered by warranty.● The solar panels do not require access to

the grid and can therefore operate independently.

● First to market advantage, there is no established competition which could threaten Sundaya.

● All systems and installation is done at a professional standard by Sundaya.

Leste, the work required to install the systems therefore is different per client.

● Project Everest has no control over the quality of the products or installation. There is a capacity for oversight however this is limited due to using exclusively Sundaya products.

● In rural areas most systems are installed for free or very little cost by NGOs or the Government.

Opportunities Threats

● Partnership with the NGOs operating within Timor-Leste would allows Sundaya to extend its influence throughout Timor-Leste such as in rural areas

● Install commercial-sized arrays on government buildings and land to assist with the government’s sustainable development plan to have 50% of the country’s energy usage to be generated from renewable sources in the very long term.

● Hiring of CNEFP graduates to do maintenance work on the panels, if the college is willing to upgrade to a Cert IV course

● Possible competition if NGOs decide to operate in the commercial area.

● Potential government intervention● The view of ‘we have too much power’ of the

Timorese Government as the Hera generator acts as only at 40% capacity, reducing their willingness to invest in renewable energy as it is seen as surplus to needs. Commercial installations would also reduce some revenue from EDTL and these may be met with resistance.

● The bureaucratic process of the Timorese government means that starting a business as a foreigner would be difficult.

6. Marketing Strategy6.1 Brand

For the time being the business will operate under the name Project Everest, as this is how the

partnership is signed.

6.2 Channels of Communication

All marketing is currently done through face to face, cold calling and word of mouth channels. At

this stage there are no plans for marketing campaigns due to the logistics of how Project

Everest is registered as business. Advertising in Timor-Leste is also expensive, with a tax on

per square metre of billboards (Teixer,2017). This is not a huge issue, as since Dili is a small

city, it is easy to locate these business and approach them in person. For rural areas there is


the intent to engage NGO’s to help spread our brand, however this may conflict with their

interests as we would be looking to make a profit.

7. Competitor AnalysisThe predominant competitor is the grid. All businesses in Dili are on the grid and most have

diesel generators for blackouts. Apart from the few businesses who pay smaller electricity bills

due location (e.g. businesses located near the ex-president’s house are be cheaper than most),

solar panels are a more reliable option than the grid. In the long run, solar panels are far

cheaper, far more reliable on a day-to-day basis and are more environmentally friendly.

In terms of competition in the solar market, there are currently no other businesses in Timor-

Leste supplying commercial large-scale solar systems. Hugh Collett was the sole potential

competitor in this space, but since a partnership has been formed this is no longer the case.

Currently there are several NGOs that operate within Timor-Leste who supply solar systems

such as the Alternative Technologies Association (ATA). These companies however, are not-

for-profit and focus almost solely on the population disconnected from the grid as well as

residential areas living below the poverty line. Project Everest plans to vend collective solar

systems to these areas in the future once better established. Since rural residents are unlikely

to have the capital to invest in solar power, Project Everest is seeking out partnerships with

these NGOs. For example, a partnership with WaterAid could provide water pumps with solar

panels that work when blackouts occur. WaterAid has been contacted about this and there

could be a potential partnership, provided there are Timorese people within the country to

perform maintenance. This would turn a potential roadblock into selling to regional areas into a

huge opportunity. There have also been meetings with DFAT (formally AUSaid), USaid, and

Tomak, who provide great potential for funding that would allow the business to expand into

rural areas with subsidised products.

8. Operations and LogisticsThe operations conducted by Project Everest will be people on the ground engaging new

customers and projects. Secondary activities include working with Hugh Collett and Sundaya to

provide these customers with their solar solutions. Initially all the logistics of supplying the solar


systems, installing, importing and maintaining will be done by Sundaya and by association

Collett. This removes the logistics time constraints from Project Everest, allowing full focus on

the customer side of business. This requires minimal resources from Project Everest aside from

manpower.

9. Cost and Pricing StrategyThe Sundaya brochure of pricing for solar systems is being used to provide customers with an

estimate of system prices (refer to appendix A). The pricings are around USD$1.2 per Wp of

solar power (including inverter and installation), which is a very competitive price based on

preliminary research. This provides an excellent price point for customers and makes solar

systems more accessible to more customers, particularly in Timor-Leste’s low-income

environment. As Project Everest is operating on commission and has no significant financial

costs involved apart from transport, the commission represents the profit margin.

10. Financial Analysis and ReportingThere are minimal costs involved for Project Everest at this stage, and all commission would be

turned over as profit. As such, there is limited financial analysis to be carried out currently.

11. Contingency PlanningThe benefit of the current business plan is that there is low risk and minimal liability. The major

risk would be an incident irreparably severing the relationship between Project Everest and

Hugh Collett or Sundaya. Similarly, the partnership between Hugh Collett and Sundaya could be

severed, either way leaving Project Everest without a supplier. In this event a significant re-

evaluation of the business model would be needed, to either find new suppliers for the same

products or to pivot the company’s focus. Mitigation of these risks would be to conduct all

operations with care when dealing with Collett and/or Sundaya. This risk is seen as critical

however very unlikely as the beliefs and aims of Project Everest, Collett and Sundaya are all

aligned to helping empower people through renewable energy. The solar company provider that

was being looked into prior to the partnership was JA Solar, and if a relationship breakdown

were to occur, JA Solar is likely the next best option identified by the December team.


A second significant risk is any intervention by the Government. Through numerous anecdotal

stories, Trekkers have been told of how the Government of Timor-Leste has been known to

create bureaucratic difficulties for companies. This could possibly happen due to the sensitive

nature of the diesel contract for the Hera generators. Ideally, the Government would be

removed from Project Everest operations as much as possible unless a project was set up

through them, in which case working with them would be advantageous concerning any

bureaucratic hurdles. Projects should be selected carefully, and should not push into any

Government domains.

Dili is a small place, so exhausting the market is an issue. Preliminary research has been done,

looking into rural areas, and contacts have been made with property developers and the military

who have the potential to be long-term clients. However, even if the solar market in Timor-Leste

eventually runs out it is hoped that our success with Sundaya will lead to a global partnership

allowing for similar implementation in the other countries Project Everest operates in.

12. References:1. Energy Team and Collett, H (2017) Multiple conversations about the future of energy in

Timor Leste.

2. Energy Team and Guterres, V. (2017) Meeting at EDTL regarding Atauro.

3. Republica Democratica de Timor Leste. (2011). Timor Leste Strategic Development

Plan. [PDF] Dili: Republica Democratica de Timor Leste Parliament, p85-92. Available

at: http://timor-leste.gov.tl/wp-content/uploads/2011/07/Timor-Leste-Strategic-Plan-2011-

2030 1 .pdf . [Accessed 18 Dec 2017]

4. Energy Team and McGovern, K (2017) Meeting at Moby’s

5. Teixeira, J. (2017) Timor-Leste's New Public Advertising Licensing Regime, LinkedIn

[ONLINE]. Available at: https://www.linkedin.com/pulse/timor-lestes-new-public-

advertising-licensing-regime-jos%C3%A9-teixeira/ [Accessed 20 Dec 2017]

6. Collet, H. (2017). Sundaya GPV brochure [PDF] Available at:

https://drive.google.com/open?

id=0B2mfZD1h744NSHNTSHZzcmE2aTNfZ0tpcUZsa2dURnZyWUM4 [Accessed 20

Dec 2017]


7. Wärtsilä Corporation. (2017). Wärtsilä to ensure energy availability in Timor-Leste.

[ONLINE] Available at: https://www.wartsila.com/media/news/29-09-2017-wartsila-to-

ensure-energy-availability-in-timor-leste [Accessed 15 Dec. 2017]

Appendix A - Price and payback period of Sundaya

systems

https://drive.google.com/open?

id=0B2mfZD1h744NSHNTSHZzcmE2aTNfZ0tpcUZsa2dURnZyWUM4


Documents

Business Plan€¦ · Web viewAll marketing is currently done through face to face, cold calling and word of mouth channels. At this stage there are no plans for marketing campaigns