Grid Scale, Off-Grid, Solar

Eight African Home Solar Startups Win $4 Million in Scaling Off-Grid Energy Enterprise Grants

Launched by President Barack Obama in 2013, Power Africa is achieving unprecedented success in expanding access to electricity and spurring sustainable development across the African continent, particularly in remote rural areas south of the Sahara, where best estimates say two of every three people lack access to electricity.

Attending the UN Framework Convention on Climate Change (UNFCCC) conference in Marrakesh, Power Africa Coordinator Andrew M. Herscowitz on Nov. 14 announced $4 million in new Scaling Off-Grid Energy Grand Challenge Enterprise (SOGE) Grant awards for eight African startups that are preparing to launch or expand their presence in sub-Saharan Africa’s fast-growing home solar energy market.

Launched under the Power Africa umbrella by USAID’s U.S. Global Development Lab, the U.K.’s Department for International Development (DFID) and the Shell Foundation, the $36 million SOGE provides seed funding for African solar energy start-ups to support geographic expansion, test new business models and tap into private and public financing.

Expanding Energy Access and Putting Africans on a Clean Energy Development Path

It’s anticipated that proceeds from the latest round of SOGE grants will create as many as 120,000 new off-grid solar electricity connections in African communities.

Some commonly and long-held myths are being laid to rest as Power Africa and program participants progress towards realizing a goal of installing 30,000 MW of new, more efficient emissions-free energy capacity and 60 million new home and business electricity connections across the continent.

Prominently, these inclusive, local community-driven public-private sustainable development partnerships are proving that cash-poor rural Africans are not only willing but able to pay for access to electricity, and that entrepreneurial African solar energy providers can make innovative use of solar energy technology and develop business models that can generate healthy, reliable returns on investment.

Rural Africans are already paying for energy — typically kerosene — and at prices that eat up substantially higher portions of their average monthly incomes than is the case for Americans or Europeans, Chris Jurgens, USAID U.S. Global Development Lab director for the Center for Transformational Partnerships and USAID lead for SOGE explained during an interview.

“Kerosene isn’t cheap, it’s dirty and it can be dangerous,” he noted.

Moving Up the Energy Ladder

SOGE grant award winner d.light started out specializing in pico-solar products and services. They have since moved, or are moving, on to expand geographically and offer complete home solar solutions of varying sizes and configurations, as well as a variety of off-grid, DC home solar devices and appliances, such as LED lighting, fans, TVs and even refrigerators.

“Pico-solar products, such as solar lanterns, are the first rung on the ‘energy ladder’ — small scale home solar solutions that can power LED lighting and perhaps charge cell phones are the next step up and it continues on up from there,” Jurgens told Renewable Energy World. “Given they have positive experiences with their initial off-grid home solar products and services, we’re finding out that rural residents are keen to take the next step up the energy ladder.”

Home Solar Growth Factors

The rapidly declining cost of solar PV panels, inverters, batteries and other home solar energy system components is the most fundamental factor supporting development and growth of nascent home solar markets across the region, Jurgens continued.

“The second thing that has really gotten over the barrier of rural Africans’ ability to pay for electricity is mobile communications and e-payment technology,” he said.

As a rough guide, the home solar systems offered in nascent markets across the region can cost anywhere from $75-$250. The popularity and widespread use of mobile e-payments in countries such Kenya, Tanzania and Uganda is enabling a new class of consumers to purchase electricity as they do mobile communications, in small, easy to digest payments.

These “pay as you go” business models make leasing or purchasing affordable and very convenient. More rural residents are signing up for and making greater use of them, thereby entering or becoming more engaged in local and national economies as a result, Jurgens said.

A third critical supporting element is the response and support from leading multinational corporations and international development agencies. The leading household solar enterprises — many of which are Power Africa partners — have proven very successful when it comes to leveraging the results of initial seed funding to attract investments from both private and public sector organizations.

Creation of a Positive Socioeconomic Feedback Loop

Kenya-based D.light, for instance, recently raised $20 million in venture capital in the U.S. In addition, Acumen, Microsoft and the UN Foundation recently joined the SOGE program as supporting partners.

A positive, mutually beneficial feedback loop is emerging as a new class of rural Africans gain access to electricity, start or expand local businesses and build up credit histories. Home solar market players are leveraging all this when they approach banks and other consumer finance providers to bolster their chances of obtaining loans and at lower interest rates than would have been possible otherwise.

All this bodes well not only in terms of lifting emissions-free off-grid home solar into the mainstream of developing African economies, but doing so in ways that foster inclusive, sustainable and local socioeconomic development.