Here comes the sun: Africa awaits an energy revolution
Millions of Africans live without access to power, but solar companies are slowly tapping into a huge new market, writes Jillian Ambrose
Without a word, over 20 primary schoolchildren rise in a silent greeting; eyes cast to sandalled feet, shuffling on the concrete floor. It is late. Many will travel for over an hour from this small Ugandan village to return to darkened homes. At least for now, between bare brick walls, a single fluorescent strip light means the day’s learning can continue.
Headmaster Samuel Mukisa is one of millions of people in Uganda who are plugging into the breakneck, global solar-power boom. As his students spend their days studying in carefully spoken English, a single rooftop solar panel generates power as the shadows creep through the classroom at dusk.
The panel is barely bigger than their A4 notebooks, and the light strip stretches only slightly beyond the length of their pencils.
It is a solar storage system that costs Mukisa a daily rate of 15 cents. The average Ugandan earns as little as $1.50 (£1.14) a day. He pays each fortnight and will do so for another year. When the payment plan is completed, the classroom’s energy system will be owned outright.
If Mukisa is looking forward to that seminal date, he doesn’t show it. The headmaster is already anxious to upgrade to a second light, so another class of students can shine.
Uganda is typical of the African countries that crowd the equator. Only 15pc of its citizens live in homes that are connected to the country’s creaking energy grids. The majority part with their modest weekly salaries to buy candles and repurposed spray cans filled with kerosene to eke out a few more hours from their days.
It is almost 9.30pm but people continue to gather around Hakim Kibirige’s small neighbourhood shop, not far from the local primary school. Sugar, flour and sweet potatoes are for sale under the familiar glow of solar-powered light. Before Kibirige’s lease-to-own solar kit, the shop closed at 8pm. By this time the 18 cents worth of kerosene and candles would make staying open uneconomic.
Kibirige laughs softly: “I’m working hard. But I’m determined to pay off these lights.”
For the 600m African people living without access to power, fuel-poverty is a debilitating socio-economic block. The World Bank estimates that if sub-saharan Africa’s economies had dependable electricity, GDP growth across the region could be up to 2pc higher per annum than current rates.
The appetite for energy is unmissable. This East African nation has one of the youngest populations in the world. Seven out of 10 people are under the age 25.
On the streets of Uganda’s capital, women chat on mobile phones from the back of motorcycles hailed via the Uber app. Dust-covered men break from their work along the city’s countless construction sites. Local hip-hop anthems blare into blue skies. Kampala is a living riff on Africa’s determined march forward.
Inevitably the terracotta rooftops of the capital give way to corrugated steel. Its newly paved roads peter out into deep red earth. Here, in the rural outskirts, the streets turn dark long before the bustle of its citizens quietens for the night. Slowly, though, the streets of Africa are beginning to brighten. For a growing number of energy companies the jaw-dropping number of people without reliable power represents the opportunity to tap a vibrant, growing market, which is hungry to harness the plummeting cost of solar power.
“Sub-saharan Africa is on the cusp of a trillion-dollar tomorrow,” says Nancy Pfund, a venture capitalist in San Francisco. “The increasingly tech-savvy and young population of Africa is embracing innovation, skipping landlines for mobile phones, and choosing affordable off-grid solar in place of expensive and dangerous kerosene lamps or unreliable connections to the grid.”
Uganda is at the epicentre of this energy revolution, which is set to reverberate across the continent. Street lights, topped with solar panels, charge up through the bright daylight hours and illuminate the streets each night. Outside a store front another solar panel is propped up against the doorframe in the morning light, storing power from the sun to fuel the family-owned business.
Off-grid solar start-ups have mushroomed, making it a hotbed of energy innovation. For development organisations and socially minded impact investors, the landscape is fertile ground. But it is the entrance of major European utilities to the heart of Africa that is set to supercharge momentum.
There is a scramble of start-ups with big-name backing. Royal Dutch Shell began testing the waters earlier this year by investing small sums in Solarnow, Steamaco and Husk Power Systems. The trio have raised a total of $30m from the energy giant and other investors. In return it holds a place on their boards and a front-row seat to what could prove to be a breakthrough in microgeneration. Shell’s charity arm also backs a Uk-based firm with Africa-wide ambitions. BBOXX raised around $15m earlier this year to fund the next phase of its drive to roll home solar power systems out to 20 million people by 2020.
If Shell hopes to gain a foothold in the market it will need to compete against a former North Sea rival, and it will need to move fast.
ENGIE, once known as French gas giant GDF Suez, has taken the most decisive step into Africa’s home solar market with the acquisition of Ugandan-based Fenix International. Fenix supplies power to around 250,000 homes in Uganda through the solar kits it sells in partnership with mobile network provider MTN. The telecoms giant is the lifeblood of Uganda, taking on the role of high street banks by enabling “mobile money” transfers and payments. The popularity of the Fenix home energy system means that the company is growing. In the last nine months it has sold 30,000 kits in Zambia. It also plans to grow into markets in Ivory Coast and Nigeria to reach millions more people.
“We intend to be in multiple markets across eastern, southern and western Africa,” says Fenix chief executive Lyndsay Handler. She joined the company in 2011. It was international development work that first brought her to Africa from her native US, but it is her passion for illuminating the continent that has kept her there.
“It’s still amazing to me that 85pc of people in Uganda do not have access to power. This provides opportunity to provide a decentralised, affordable home system that can completely transform lives. It provides the whole industry an opportunity to rethink the way that we can achieve universal access to energy,” she says.
“The idea of national grids growing is not that exciting to me. This is an incredible opportunity to learn and innovate. The innovation that we are seeing here could potentially be what Engie uses in Europe next. This could inform the way we view energy around the world,” she adds.
Many are beginning to question whether energising Africa needs to be primarily through major investments in building transmission networks and investing in the large-scale generation plants, which struggle to turn a profit in Europe. Handler herself lived off-grid for three years in Kenya while she developed business plans for a solar start-up.
“I spent six months thinking about what kind of business would be life changing – but commercially viable. In that time my neighbour had a kerosene fire, and lost their entire house. Within 30 days the family living to the other side of us had a kerosene fire, and lost their one-year-old child. It made things very clear: these are not just statistics; kerosene is killing people, while costing them a lot of money,” she says.
“Beyond wanting to have an impact, we have always wanted to prove to the world that you can have a positive impact and deliver commercial
‘The techsavvy population of Africa is embracing innovation, and choosing affordable off-grid solar in place of expensive, dangerous kerosene’
‘On the grid you keep paying and paying. But the solar panel is an asset I now own. There are no issues. No blackouts. Never. These panels look so small but they are powerful’
returns. There’s an underlying drive to show that this is not just charity. You can build commercial returns in Africa. We want to be part of a story that encourages others to see Africa as a commercial market. This continent needs investment. There are entrepreneurial people, and ideas and opportunities. They need investment, not just handouts,” she says.
On the size of the Fenix investment, both Engie and Handler are tightlipped. But the five-year commitment is likely to dwarf the hard-fought annual fundraising rounds clinched by competing solar providers. In the meantime Fenix is branching into financial services. The company runs careful data analysis of each customer to determine an internal credit score, which gives customers access to appliance upgrades. Televisions and radios are the most popular offer. But school-fee loans are being extended to those with strong credit histories too. It is a customer relationship that Europe’s bloated energy behemoths could only dream of.
“Our customers are very intelligent, they understand their needs, and customer choice is really important in this,” says Handler.
Ritah Namatovu, a Fenix customer for the past three years, is considering a loan for the future. A tailor by trade, Namatovu wears a traditional handmade gomesi. At night, she can work for as long as she needs to support her four orphaned grandchildren. They giggle outside in a private game beneath a second strip of bright, white lighting, which illuminates the front of the house. These playing children, at least, are safe from the kerosene lanterns that claim 400,000 lives in sub-saharan Africa every year.
Namatovu’s only concern is that the solar panel might one day be stolen from her roof. “On the grid you keep paying, and paying. But the solar panel is an asset I now own. There are no issues. No blackouts. Never. These panels look so small but they are powerful,” she smiles.
Back under the watch of headmaster Mukisa, a boy quotes the gospel of Matthew. Ask and you shall receive more solar power, he paraphrases. One can only pray he’s right: God bless Africa, guard her children, guide her leaders – and give her power.
The average Ugandan earns as little as $1.50 a day, with much of this spent on candles and kerosene to eke out a few more hours from their days. Tech-savvy Africans are skipping landlines for mobile phones, right