SimGas is a design and production company with facilities in the Netherlands and East Africa that focuses on clean, affordable, and high quality energy and sanitation solutions. Their teams work together to design, manufacture, and install high quality, modular, domestic biogas systems that can be installed in a day. By doing so, SimGas creates healthy and safe environments for millions of rural households while contributing to the reduction of indoor air pollution, deforestation, and carbon emissions. Together with partner SNV—world leader in promoting domestic biogas in developing countries with 25 years of experience in the sector—SimGas is developing and will demonstrate off-grid, small-scale, biogas-powered milk chillers for smallholder farmers in Kenya, Tanzania and Rwanda.
The emerging dairy industry in East Africa affects the livelihoods of more than 2 million smallholder farmers. While demand is expected to more than double in coming years, only 15 percent of milk produced reaches the formal market and 30–50 percent is not delivered to milk collection centers. The reason being that raw milk is not cooled at farm level because 85 percent of rural East Africa lacks access to a (reliable) power grid. There are no solutions available on the market to provide milk chilling at micro-scale, for farmers with up to 10 dairy cows, that run independently from the power grid, and that comply with the International milk cooling standard. This creates a huge opportunity to close the supply-demand gap.
SimGas is developing the first off-grid, biogas-powered milk chiller at farm level to help milk supply meet demand: the SimGas Biogas Milk Chiller (BMC). The BMC sparks a revolution in the dairy industry; it is the first link towards a reliable milk cool chain from cow to dairy. It helps small dairy farmers to reduce milk losses and meet quality standards required to access the formal sector. The BMC runs on biogas, produced with an on-farm biogas digester. The amount of manure produced by a cow creates enough biogas to refrigerate her own milk, while leaving enough biogas to cook a meal for the household.
The SimGas Biogas Milk Chiller will empower small dairy farmers to guide their own development; the BMC can greatly improve the income of small dairy farmers, help supply to meet demand, help farmers to meet quality standards required to access the formal dairy market, and contribute to improved nutrition. The quantity and quality of milk will improve, which will enable dairies to better meet the increasing demand for milk and milk products. Savings at the farm level will lead to additional investments and more satisfied members. The SimGas Biogas Milk Chiller will empower small dairy farmers to guide their own development. In addition, the use of clean energy (biogas) for cooling and other purposes, such as cooking, will help reduce deforestation and carbon emissions.
After 10 years of operating, SimGas B.V. declared bankruptcy in November 2018 and was not able to support SimGas Tanzania and SimGas Kenya complete their project. The project ended with 75% of the milestones completed; only the manufacture and deployment of SimGas’s final BMC prototype remained.
SimGas saw strong demand for its biogas products but struggled with having sufficient working capital to pay vendors and maintain stock levels. Local banks in Tanzania and Kenya were unable to fill the role of short-term lender for SimGas. Being strongly customer focused and believing in providing high quality designs to their customers based on extensive market research, SimGas created over-engineered products. However, SimGas’s design ethos resulted in more expensive products that exacerbated its working capital problem.
There are several lessons that can be gleaned from SimGas’s experience. Company founders spoke of the difficulty to comply with Tanzanian regulations and simultaneously gain market traction. They stressed the need to be willing to abandon markets that can threaten the company’s future. Company founders also stressed the need for a strong team, especially a financial team that can focus on keeping the company’s finances on track and can sound the alarm then indicators show a problem. Overall, the biogas cooking and milk chilling markets still hold a lot of potential for those that still wish to tackle off-grid energy access.