2020 Could Be Africa’s Arrival As A Solar Market With Size

After a long wait, 2020 could well mark a decisive shift in the energy availability graph for countries in Africa, as multiple approaches and tactics finally make a case for a stronger push.

For long, Africa has suffered from the world’s lowest electrification rate. Figures from 2017 state that Its power consumption per capita is just 613 kilowatt-hours per year, compared to 6,500 kWh in Europe and 13,000 in the United States. take out relatively industrialised South Africa, and the figures become even worse.  In figures that have been cited regularly, electricity con­sumption per person in large African countries such as Ethiopia, Kenya, and Nigeria is less than one-tenth that of Brazil or China. In poorer countries such as Mali, a typical household uses less electricity in a year than a Londoner uses to boil a kettle each day. And nearly 600 million people in sub-Saharan Africa lack access to electricity altogether — with the result that whole communities live in the dark, come night time.

It’s a story that is repeated in country after country in the massive continent, with lack of transmission infrastructure to blame  usually. This is a legacy of the blighted way in which most borders were drawn up by colonial countries, as well as issues with terrain, political instability, and lack of financing. All this has coalesced to create a big opportunity in the continent today, for renewables, as well as distributed or off grid solar, in fact. The efforts are finally beginning to show results, in fact.

Back in April this year, the African Development Bank started a campaign to “light up and power Africa”. It has committed $12 billion to energy projects between 2017 and 2022, and aims to attract a further $50 billion in private sector investment.

The World Bank has agreed to bolster the Regional Off-Grid Electrification Project (ROGEP) with access to $225 million in cash and credit.

The project improves off-grid access to electricity through standalone solar systems in 19 countries in West Africa and the Sahel including Benin, Cameroon, the Central African Republic, Chad, Gambia, Ghana, Mali, Mauritania, Niger, Nigeria, Sierra Leone and Togo. Funding is critical to cover the high initial capital costs, as well as cover for lack of adequate information on key parameters like credit history of customers etc.

The World Bank funds include $150 million in credit and grants from the International Development Association – a unit of the World Bank that helps the world’s poorest countries – and a $74.7 million contingent recovery grant from the Clean Technology Fund of the Climate Investment Funds, which are also administered by the World Bank alongside regional development banks. Contingent recovery grants must be repaid if other lenders go on to supply funding to ROGEP.

“The project is expected to benefit about 1.7 million people currently living without electricity connections or with unreliable supply, as well as businesses and public institutions who will use modern standalone solar systems to improve their living standards and economic activities,” the World Bank had said in a statement announcing the funding.

Taking the cue is a new breed of African innovators that is harnessing mobile money, along with advances in solar power and battery storage, to leapfrog the continent’s gaps in electric power generation. One example is Kenya-based M-Kopa, which provides solar-powered electricity generation and storage solutions to households that lack access to the grid — and finances payment over a twelve-month period via mobile money accounts. Since its founding, in 2011, M-KOPA has sold more than 600,000 household kits and garnered investments from multinationals including Japan’s Mitsui.

Another example is Uganda-based Fenix, which has sold 140,000 solar power kits, also enabled by mobile money. In late 2017 Fenix was acquired by Engie, a major global energy company based in France, as part of a drive to use digital technologies to provide 20 million people around the world with decarbonized, decentralized energy by 2020. Yet another pioneer is UK-based BBOXX, which distributes its solar kits through agents in ten African countries — and uses remote monitoring technology to improve battery life and users’ experience.

The fact that most off grid suppliers have to compete with diesel powered captive power, and barely any central grid, makes the opportunity, and the battle more even. The drop in solar power costs means that they find themselves very competitive versus captive power today, without adding to the pollution or logistics of fuel transport too. That means, even in larger economies like Nigeria, there is a market. Firms like Lumos, a big provider of off grid power in Nigeria, claim that their monthly costs are $15 per household, as compared to $70 for captive power.

While a variety of technologies and products are considered part of the off-grid ecosystem, solar home systems have been the favoured option from an investment perspective, and particularly those sold under a pay-as-you-go (paygo) model.

Under this model, residential customers in remote areas are provided with a solar-generation unit, usually backed up with a battery, and the homeowners make lease payments over time as they benefit from the electricity. Paygo allows solar companies to tap into a vast base of potential customers that cannot pay for a system upfront, but it means the companies must carry that debt on their balance sheet. Of course, the model requires scale, which itself requires funding. The good news? Funding has become much more cheaper and widely available for firms with a proven model and technology, enabling some to grow faster.

Firms like Engie are also investing in a big way in mini-grids, which seek to power entire villages with renewable systems  upto 5 MW in capacity. With many such projects and pilots launched in the past 18 months, 2020 might just be the year when the next level of push happens. Another example of the unconventional partnerships taking shape in the continent  is that between telecommunications operator Orange pay-as-you-go solar power provider Greenlight Planet, to provide Orange customers with access to clean energy solutions in several African countries.These countries include Burkina Faso, the Central African Republic, the Democratic Republic of the Congo, Liberia, Mali, Sierra Leone etc.

The partnership involves both companies deploying Greenlight Planet’s Sun King range of off-grid energy systems available to the hardest-to-reach regions, especially to the households who live off-the-grid.

Greenlight Planet’s solar systems first become available for Orange’s eight million customers in Burkina Faso from November 2019 onwards.

Thus, even as total capacity number projections or the continent vary between 3 to 4 GW from various estimates, these probably ignore the possibilities for off grid solar, which can contribute massively. 2020 will hopefully being both clarity and direction, to make it even easier for firms to consider the continent’s countries in their plans.