Daniel Pacheco sees a big opportunity in the solar market in Cambodia and is an early market entrant to the industry in the country.
Human Asia caught up with Daniel to see how his solar venture is doing.
Enlighten us about the current general state of the energy industry in Cambodia
Daniel: A very significant part of the population does not have access to the electrical grid. Even in areas with the grid, Cambodia has one of the highest electricity prices in the region and the world, with 20 cents per kWh.
But Cambodia is a fast growing country and its energy infrastructure is developing fast to catch up with this growth. It has taken huge strides in bridging this gap as well as in providing more reliable electricity for the commercial and industrial growth of the country.
Up until recently the country has depended vastly on importing electricity from neighboring Vietnam and Thailand, while it invested internally in their own infrastructure. With a big emphasis on Hydro power projects, the country is becoming less and less dependent on imports, and has a plan to reach energy independence very soon. Unfortunately a large part of this plan still depends on increasing the number of coal power plants and large hydro plants, both which can have a negative environmental and social impact.
What did you have in mind when you started NRG?
Daniel: I started NRG because I saw a huge opportunity for solar energy in Cambodia. Solar had the opportunity to create immediate impact by bringing household level solutions to a large part of the population without access to the grid, while at the same time help shape the policy for larger industrial and utility scale plants.
Who is your target market?
Daniel: We have two types of clients: Our distribution business brings household level solutions to rural areas that do not have access to the grid, and are depending on car batteries or kerosene lamps to meet their energy needs.
These households are usually very poor and spend a significant amount of time and money recharging used car batteries at the nearest diesel charging station. Aside from the environmental impact of changing to solar, these families get the benefit of not having to spend time ever couple of days to recharge their used car battery.
Over time, the solar home systems also provide significant savings as the customer never needs to pay for fuel again after they have paid off the system. We work with micro finance organizations to make these systems affordable.
Our second type of client is what we call C and I, commercial or industrial entities looking to save electricity or have more reliability when operating in remote areas. Typical clients in this area are hotels operating in remote locations or islands. We have a growing demand from medium scale factories looking to save money, have more reliable power, and are also interested in becoming more environmentally sustainable.
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What was the biggest challenge for NRG when you started, and what is your biggest challenge now?
Daniel: There are many challenges in this business. One of the main ones is financing. As opposed to being connected to the grid where our clients just pay for the electricity they use, these systems have a large upfront cost. We have solved this by partnering with financing organizations that can give our customers a variety of financing plans. Currently our biggest challenge is that in Cambodia, the regulatory environment is not very clear, which significantly increases the risk for investors and clients who wish to install large scale solutions.
What are your plans for NRG Solutions in the short and long term?
Daniel: We are looking to grow significantly over the next few years with commercial and small industrial projects as our core clients, while we continue to work with the rest of the sector to push for more encouraging policies and regulation to open up the huge potential market for solar in Cambodia. We are also looking to expand into other countries in the region in the next couple of years.
Daniel, why Cambodia and how did you end up there?
Daniel: I came to Cambodia in 2009. I was living and studying in New York and as part of a class, we were designing a solar system for an organization based here in Cambodia. They later invited me to come and supervise the installation. During that month I saw the huge potential for solar to have an impact in Cambodia and I also fell in love with the country, so I decided to stay a bit longer and see what opportunities there were. After working with a few existing companies, I eventually started NRG.
What are the pros and cons of living and doing business in Cambodia?
Daniel: It is true that Cambodia is still very undeveloped, but is also one of the fastest growing economies in the world. It is a country where there are many opportunities and it is changing very fast. Being part of that change and progress, with so many opportunities and challenges, is a main part of my motivation to live and do business here. Just seeing the change in the last eight years that I’ve been here has been a great experience. Cambodia is also a great place to live in. Day to day life is very easy, people are are great and friendly. Phnom Penh is a booming city filled with great food and nightlife. I’m a big fan of the beach and Cambodia has some of the most beautiful islands to go visit and escape the city.
You have good degrees from good universities. Why jump into entrepreneurship?
Daniel: It was definitely not planned. Being in Cambodia, looking for opportunities in the solar sector, there were not that many back then. By chance and with the support of some people I met, the opportunity was presented to me to start a new solar company and I thought, why not? So its been a very steep learning curve, but an invaluable experience that I could have never gotten by following a more traditional career oriented path. I do not see myself doing anything else other than entrepreneurship. I have actually already started other businesses and looking into more. For example, a few years ago I co-founded Samoa Distillery, Cambodia’s first rum distillery.
If you could do everything all over again, what would you have done differently in your entrepreneurial journey?
Daniel: It’s always tempting to look back and think of things I could have done differently, but the entrepreneurial journey is more about making mistakes and learning from them than anything else. If anything I would say that having known I was going to end up in this journey, I would have tried to get a bit more of an education related to business or at least some experience working for a larger company so I could learn some things faster. But there is no better way of learning than by making mistakes, so it’s hard to say how different things would have been if I had taken a different path.
Advice for aspiring entrepreneurs?
Daniel: Good luck! No but speaking seriously, one thing that I wish I had done more in the beginning was to educate myself about business basics, and get advise from people who have already accomplished what I was trying to do.