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

The Sunday Telegraph - Money & Business - - Front page -

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

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