In recent years East Africa has emerged as a hotbed of creative solutions to meeting people’s energy needs as I saw for myself during my visit to Kenya and Tanzania earlier this year. The nexus between clean energy and mobile-based technology is one that is helping bring power to some of the remotest corners of the continent.
In Kenya, where around 80% of the population lacks access to mains electricity, 2015 Ashden Award winner SteamaCo is using software and hardware developments to bring the benefits of clean energy to off-grid customers through solar powered micro-grids. They use a cloud-based remote metering and payments system which monitors energy use, lets the users pay for power using their mobile phones, and quickly troubleshoots any problems. The micro-grids work like mini power stations for each village, supplying enough energy to run small businesses, as well as power TVs, radios and bright lights in the home.
I was lucky enough to visit Oloolaimutia, a market town on the edge of the Masai Mara National Reserve; small in terms of number of residents but with a complicated energy access picture. SteamaCo has helped install a solar powered mini-grid operated by PowerGen and, often for the first time, shops now have lights so that they can stay open after dark, cafes and bars can serve cold beer and have TV or music playing. The butcher has a fridge. A cinema has opened and there is an internet café. The customers we met all spoke very positively of having their own micro-grid connection - one restaurant owner said that having a TV attracted more customers; a hair dresser told us that she no longer had to use a dirty diesel generator and saved money in the process.
Since the micro-grid was installed the national grid is being expanded to the village but the connection charge is high, sometimes as much as US$1000 and so beyond the reach of individuals and small businesses. The village school and a safari lodge are the only ones that will benefit from this extension. Apart from the prohibitive connection cost to the national grid, the electricity service can be unreliable for remote spots such as Oloolaimutia, so the mini-grid here is thriving and will be in demand for some time, but SteamaCo want to get to the point where, when the macro-grid arrives, the micro-grid can then connect up which would be a win-win situation. The existence of the micro-grid proves demand in an area which is important for return on investment of grid expansion. In turn, the macro-grid could take over the assets once it arrives, mitigating a risk for the micro-grid operator.
In neighbouring Tanzania, Off Grid Electric is using the mobile money revolution to sell solar home systems to off grid homes and small businesses at an affordable price. Their pay-as-you-go service is tailored to user needs, with flexible payments, opportunity to change service level, and excellent support from a customer care team and local agents, as well as a sophisticated app-based customer registration and product tracking system.
When Off Grid Electric won their Ashden Award in 2014, they had around 12,500 customers. Fast forward just two years and they have more than 100,000. The workforce has gone from 80 employees to 900 and they are now selling more than 10,000 solar home systems a month! Off Grid are also partnering with the Tanzanian government on the One Million Solar Homes initiative which aims to harness the sun’s power for one million properties by 2017 in a country where, according to the International Energy Agency’s most recent World Energy Outlook, only 24% of the population have access to electricity.
Due to popular demand, much of their work now focuses on appliances and Off Grid provides a radio or TV for many of the systems that they sell (depending on its size). They recently announced a business in a box product line called Kazi na Zola (Work with Zola). This offering provides solar-powered business tools like solar powered hair clippers for people to be able to set up their own barber shop. And their research and development team are already working on the next level up, exploring how to power larger appliances such as computers and fridges in order to be able to respond to consumer demand. One couple who we visited were the proud owner of an M120 solar home system capable of charging a small TV, a radio and indoor and outdoor lighting. There are so many uses for solar power that Off Grid is busy developing to meet the specific needs of their market.
One of this year’s Ashden Award winners, Tanzanian- and US-based finance organisation SunFunder, has identified a crucial element when it comes to the success of start-up solar enterprises like SteamaCo and Off Grid Electric - the need for working capital. The company is filling the vital funding gap between investors and businesses specialising in off-grid solar energy that need short-term loans. By unlocking capital for debt finance, they are enabling solar companies to make power an affordable reality for the millions living off-grid.
SunFunder has so far provided over $12 million of finance to 24 solar businesses in ten countries, helping them to offer solar electricity to thousands of people, and are currently in the process of raising a $50 million fund. By moving enterprises from seed funding and grants to securing larger, commercially viable investment needed for expansion and scale-up, we can start to tackle “the Missing Middle” that’s currently impeding progress towards achieving access to affordable and clean energy for all.
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This article was first published on The Huffington Post.
Ashden is a partner of the Futures Centre.