Renewable energy powers growth in Senegal

The government of Senegal, led by President Macky Sall, has made increased renewable energy generation one of the key pillars of its power generation strategy, with hopes of achieving universal access to electricity by 2025.

As part of its Plan for an Emerging Senegal (PES), the government expects increased generation capacity to help position Senegal as a middle-income nation by 2035.

A target of 15% renewable energy in Senegal’s energy generation mix looks set to be accomplished ahead of the 2025 schedule, as colossal utility-sized wind and solar power plants are due to be added to the national grid within the next two years.

The country has traditionally relied on imported liquid fuels for its oil and diesel-fired plants, but recent discoveries in oil and gas reserves could make Senegal an oil exporter in the coming years.

A further objective of 25% of renewable energy in the mix by 2030 looks achievable, according to Massaer Cisse, Senegal general manager of renewable power generation company Lekela Power.

“It’s an aggressive target and with that target come challenges, notably that grid integration and transmission will have to keep up with supply.

“It’s vital that all stakeholders are involved in work to upgrade the grid, but things are moving in the right direction,” says Cisse.

These are dramatic developments for a nation formerly hampered by the low supply and high cost of electricity, which stunted economic growth at the beginning of the decade.

Between 2010 and 2018, access to electricity increased from 54% to 68% according to the World Bank, and generation capacity rose from a 2012 low of 573 MW, to a current 864 MW capacity, subsequently providing cheaper tariffs for consumers. 

Senegal has experienced yearly GDP growth above 6% since 2015, and optimism about further growth among the young and rapidly expanding 16.6m population is palpable.

The power market continues to benefit from a partially liberalised structure, allowing private companies to build and operate power plants, while transmission and distribution remains controlled by state-owned utility Senelec. 

West Africa’s largest windfarm

Lekela – a 60:40 joint venture between emerging market investor Actis and a consortium led by Mainstream Renewable Power – has initiated construction on the Taiba N’Diaye windfarm, 80km northeast of Dakar.

Once complete in 2020, it will be the largest windfarm in West Africa, adding 158.7 MW to the grid and providing more than 450,000 MW hours of energy per year for 2m people.

Lekela deploys its fund in Africa, with a portfolio of three established windfarms in South Africa, and development of additional plants in Ghana and Egypt.

Chris Ford, Lekela’s COO, says that the business can add value to a nation benefiting from a stable government, and political leadership committed to a vision of how it wants the market to develop.

The company also profits from advancements in technology that will enable it to install 46 Danish-made Vestas turbines that will each be able to produce 3.45 MW of energy.

Wind turbines are getting bigger, more powerful and increasing in generating capacity, enabling greater returns. 

“The technology is getting cheaper over time, particularly as turbines get bigger the physical and technical limits the turbines push out increase.

“The direction of travel for renewables is positive and I think it continues to surprise people just how competitive it can be. As rates go down, and with the comparative volatility of oil prices, renewables become mainstream,” says Ford.

The Lekela project is also expected to contribute up to $20m to the local community and provide 400 jobs during construction, while continued employment opportunities will be provided for a maintenance team during operation of the plant for at least 25 years. 

Spurred on by the successful construction of smaller scale solar plants, Senegal launched a tender process in 2018 to build two further plants with a combined installed capacity of 60 MW, which will almost double existing capacity.

Developed in partnership with the International Finance Corporation  and part of a wider initiative called Scaling Solar, 14 bids were tabled.

The French alliance of Engie, the utility, and Meridiam, the infrastructure investor, won at auction.

Engie is currently building the plants in Kahone, near Kaolack, and Kaël in the Diourbel region, and they will represent one of the fastest buildouts of renewable power in Africa.

The contract was awarded with prices approximately 60% lower than the solar contracts previously agreed in Senegal.

Smart move

“In Senegal, they did something very smart, which other countries should learn from,” says Philippe Miquel, Engie Africa regional director.

“They built six solar plants without tender slightly above market rates to get the ball rolling, and in doing so they managed to bring four or five solar plants on budget, on time, and build an industry first”.

With companies confident they can quickly build a solar PV plant and take it to market, and sure they will be paid by Senelec, the market looks ripe for growth, with foreign capital set to follow.

Despite encouraging growth and a national utility aware of the need to increase transmission and distribution networks, there is a requirement for more nimble players in the market.

While there’s an 88% connection rate to the grid in urban areas, that number falls to 40% in rural areas, according to Power Africa, the US development programme. 

A new marketplace, built for Taiba’s farmers and traders to sell their goods, has now been completed.

Faced with the choice of expanding the grid network deep into rural areas at cost or choosing not to, Miquel believes it would be best for Senelec to chose the latter. 

“As you reach out to people far away from the network it is costing per connection an enormous amount of money that’s not worth the investment, because the people, particularly in rural areas, consume very little,” he says.

Which is where the importance of mini-grids and companies like Oolu Solar – who sell solar home systems and in-home chargers – will play a key role if the country is to reach its target of universal electrification by 2025.

The long-term prospects for solar generation will face a brighter future if battery storage technologies can be developed and implemented in the country.

Senelec has expressed interest in piloting this solution, but owing to the high cost and unproven revenue streams of the technology it is yet to take off.

Despite these challenges, multinationals continue to show increasing interest in the renewable market in Senegal.

“There’s a clear vision and master plan so that’s really reassuring for a developer like ours, so Senegal is a market we want to continue investing in,” says Miquel.

FINANCIAL TIMES: Senegal’s journey from blackouts to gas and green energy Progress is swift, but universal access to electricity will take time

In the control room of the Cap des Biches power station on the outskirts of Dakar, a framed photograph of Senegal’s president Macky Sall hangs on a wall overlooking a bank of computer screens showing data from the plant’s five generating units. The presidential portrait hints at the importance of a facility which accounts for about 10 per cent of domestic power generation and acts as a symbol of the country’s progress towards making electricity more reliable and widely available. “This is the brain of the power station and the engines are its heart,” says Gionata Visconti, the plant’s Italian manager, gesturing towards an adjacent building where throbbing combustion engines powered by heavy fuel oil generate 86 megawatts of electricity when running at full capacity. “Blackouts have dramatically reduced since we started operating in 2016 and electricity prices have decreased,” he adds, standing beside a telephone which provides a direct hotline to grid operators at the country’s state-owned power utility, Senelec. Cap des Biches is run by ContourGlobal, a UK-listed power company. It was developed with $132m of financing from the Overseas Private Investment Corporation (Opic), a US government agency which supports development in emerging markets, and the International Finance Corporation (IFC), the World Bank’s private sector investment arm. As such, the plant, beside a sandy Atlantic beach with palm trees lining its access road, is a showcase for the combination of private international capital and development finance which has helped overcome the power shortages which until recently bedevilled Senegal. “The government has put a lot of focus on power production,” says Massaer Cisse, senior manager in the Dakar office of Deloitte, the global consultancy. “In the past five years, power generation capacity has increased by 25 per cent.” A solar array near Thiès in western Senegal © Xaume Olleros/Bloomberg Senegal has relatively high levels of electricity access compared with the rest of west Africa, with 61 per cent of the population connected to a reliable supply. Yet there is a big divide between the 88 per cent connection rate in urban areas and 40 per cent in the countryside. About 1.2m households across Senegal have no access to electricity, according to Power Africa, the US development programme aimed at closing the continent’s energy deficit. That leaves the government a long way from its goal of universal access to electricity by 2025. A big expansion in renewable power will be critical. So far, only 80MW of solar power has been installed and most of the country’s 864MW of generating capacity involves burning of heavy fuel oil. However, plans are under way for a further 350MW of solar and wind projects which would represent one of the biggest and fastest buildouts of renewable power in the region. There is a divide between 88 per cent connection rate in urban areas and 40 per cent in the countryside A French alliance of Engie, the utility, and Meridiam, the infrastructure investor, this month won an auction to build 60MW of capacity as part of the IFC-led Scaling Solar scheme, at a 60 per cent lower cost than past solar projects in Senegal. Faheen Allibhoy, IFC country manager in Senegal, says falling costs make renewables an attractive option in a country with plentiful wind and sun. Until now, electricity prices have been inflated by the cost of importing fuel oil. A further 158MW is due to come from a wind farm planned at Taiba N’diaye, 80km north-east of Dakar, by Lekela Power, a joint venture from Mainstream, the Irish renewables developer, and Actis, a UK private equity investor focused on the developing world. Like the Cap des Biches plant, the Taiba Ndiaye wind farm is receiving support from the US Power Africa programme in the form of $250m of Opic financing. Chris Antonopoulos, chief executive of Lekela, says his company is ready to start construction of what will be west Africa’s largest wind farm as soon as final approval is received from Senegalese authorities. It will take about two years to complete. Ms Allibhoy cautions that more investment in transmission and distribution infrastructure is needed to absorb rising amounts of renewable power, the intermittent nature of which makes for more volatile supplies. “We’ll have gone from zero renewables to 20 per cent [of generating capacity] by the end of next year,” she says. “It is extraordinary progress but we are reaching the technical limits.” In the longer term, the government is counting on newly discovered offshore gas reserves providing a further source of domestic power generation after production starts in the 2020s. The Cap des Biches plant is designed to be converted to burn gas, rather than oil, once supplies are available. However, as with renewables and the grid network, heavy investment will be needed in gas processing and distribution infrastructure before the promise of cheap and plentiful gas-fired power can be realised. In the meantime, some investors are focusing on smaller-scale local projects to fill gaps in access. A Senegalese start-up called Oolu, for example, provides off-grid solar panel and battery kits to rural households for a low monthly fee paid through mobile phones. The company has received investment from Y Combinator, the Silicon Valley fund which has backed companies including Dropbox and Airbnb. With demand growing at 40-50MW per year, a range of energy sources will be needed to keep expanding Senegal’s power system. As Mr Cisse at Deloitte says: “It’s going to take a lot of investment and a lot of co-operation between the public and private sectors.”

Can Nigeria’s tech community contribute to solving the country’s energy crisis?

Two weeks ago, I tried renewing energy credits online via my bank’s website. I got debited instantly and immediately proceeded to check if power was restored. It wasn’t and I didn’t receive a refund until a week later. Although in the past, I have successfully used the system a few times, the unreliability of the service is a problem for many. At least 30,000 electronic payment transactions fail every day, according to one Nigerian commercial bank.

Nigeria is a nation where its citizens live with limited power daily.  Last month, the power supply dropped from 4,000 megawatts to 2,039 megawatts, grossly insufficient for a nation of 180 million people. The power generated dropped due to a shortage of gas supply to power stations. If all the country’s power facilities work to their full capacity, Nigeria could generate about 12,000 megawatts. Egypt which has about half of Nigeria’s population currently has the capacity to generate more than 24,700 MW and 99% of its residents have access to electricity.  Nigeria needs about 50,0000 MW to meet its needs according to Obioma Onyi-Ogelle, who teaches energy and natural resources law at the Nnamdi Azikiwe University.

While the solution to the energy crisis will include fixing the inefficiencies in each segment of the value chain from generation to distribution, there is a need for solutions that make it easier for consumers to access power. In a number of scenarios, some consumers will never be able to access power without these solutions. If a remote village, for example, is not connected to the power grid and have no access to financial services (whether informal or formal), energy companies will find it difficult to provide them with electricity.

Given its environmental benefits and ability to reach remote populations who are without power, renewable energy holds the best proposition to solve our power crisis. There are of course a number of arguments against the implementation of renewable energy sources, including affordability, however, prices are continuing to drop with flexible payment options increasing. Additionally, renewable energy operators are actively working on resolving other barriers–like payments and collections–to taking clean energy to those outside the grid, who may be excluded financially.

Dan Rosa and Doseke Akporiaye, CEO and Managing Director, Nigeria, respectively, for Oolu Solar, detailed the limitations of Nigeria’s payment infrastructure in rural areas in an interview with TechCabal last September. Mobile money penetration remains very low and most pay-as-you-go solar home systems depend on it to collect payments. The limited payment system also makes it difficult for banks to fund the sector. Some bankers I spoke with from a major Nigerian commercial bank highlighted the risk it poses to potential investments. “We always ask operators how customers will pay and renew their energy credits before we determine if it is a project we can fund,” one of the bankers, who asked not to be named because he wasn’t mandated to speak on behalf of his company, told me. What if technology could help with solving these problems and expand access to energy that is clean and readily available?

Conversations during a renewable energy workshop organized by Clean Technology Hub, highlighted different ways tech solutions and entrepreneurs can enable clean energy access. “Renewables need technology for remote monitoring, interconnection, financing, payment solutions, modelling and system design,” said Faisal Hammed, Senior Associate, Mini-Grid Development at Clean Technology Hub, in his presentation during the event.

Panelists also shared ways critical issues in the power sector could be solved by technologists. “The unbanked population in Nigeria are often without access to electricity. This presents a huge opportunity for fintech providers to integrate with renewable energy solutions,” said Adedotun Eyinade, Program Manager at Offgrid Energy Market Acceleration Program.

Elaborating on finding solutions, Temilade Sesan, a Lecturer at the University of Ibadan’s Centre for Petroleum, Energy Economics and Law, said, “There’s a need for greater synergy between academia & industry. Nigeria has research centers in renewable energy with output that can be commercialized.”

The first panel session at the Tech meets Renewable Energy workshop. L-R: Gozie Okubor – Moderator (Associate, All On Energy), Chidi Uguru (Head of Strategic Partnerships, Big Cabal Media), Teju Abisoye (Acting Executive Secretary, LSTEF), Fayo Williams (Managing Consultant, Simply Exponential), Temilade Sesan (Lecturer, University of Ibadan), Tobi Adesanya (Associate, Persistent Energy) and Mercy Olorunfemi (Business Development, NINE).

Besides payments, the event also noted the opportunity in energy analytics. Since there is little to no transparency in billing, many Nigerians do not know how much power they consume and costs. Energy analytics would be useful in ensuring that Nigerians get value for their money, paying for exactly what they consume.

“Energy analytics can help reduce energy costs through control, measurement and management system,” Oluwatobi Williams, a Data and Energy Analyst, explained. For the energy supplier, smart meters and other remote monitoring solutions can help address the issue of meter tampering which causes them to lose revenue.

The second panel session at the Tech meets Renewable Energy workshop. L-R: Chibuikem Agbaegbu – Moderator (Market Access Lead, Clean Technology Hub), Adedotun Eyinade (Program Manager, Offgrid Energy Market Acceleration Program), Ifeanyi Odoh (Head, Offer Marketing & Business Development – Schneider Electric), Oyelowo Damilola (General Manager, Climate Finance Advisory Limited), Chuks Umezulora, Tobi Williams and Femi Adeyemo (CEO, Arnegy).

 Speakers also pointed out that while Nigeria’s tech community could enable access to clean energy, adoption of renewable energy sources would help meet the country’s need for a more reliable power supply, a key priority and cost driver for entrepreneurs including those in the tech sector.

While fixing the energy crisis is not a task that can be done in a few weeks, tech could help accelerate access to power for more people. Solving issues such as payments, access to consumption data, meter-tampering will remove the barriers to reaching many of the 90 million people who live in rural Nigeria with limited or no access to power.

Power of the sun – how solar is improving community life in Africa

Investments illuminating Africa

Investing in solar energy has created a better future for Senegalese families, with improvements including education, safety, security and health

by Beetle Holloway; Published in The Guardian

As everyday activities go, flicking a switch barely even registers. But when Ibrahima Ciss pushes the small plastic lever by his door, a broad smile rises on his face. The 61-year-old is chief of Khaye Sérère, a rural Senegalese village in the western Thiès region, but he’s also the proud owner of a personal solar system, which is providing his home with electricity for the first time in his life.

Due to their remote location and low incomes, only 10% of rural households in west Africa have access to electricity. Most rely on an unhealthy concoction of candles, kerosene lamps and battery-powered torches, but new solar initiatives are providing an alternative.

In December 2015, Dakar-based Oolu Solar came to Khaye Sérère offering a solar home system (SHS) that allowed households to charge small electrical items and power lamps; Ciss was one of its first clients. “Before Oolu, I used to use one or two candles every night,” Ciss explains, sitting on a low, wooden bed, a lens-shaped lamp above his door brightening the room. “Each candle cost 1500 CFA (£2), but now I only spend around 110 CFA (£0.15) per day.”

Recurring costs add up: the World Bank estimated that sub-Saharan Africans were spending $10.5bn each year on non-renewable light sources. With solar power costing him just 3,500 CFA (£4.70) per month, Ciss now has more funds for daily activities, such as feeding the chickens and goats that totter in his courtyard.

Here are six more ways solar is benefiting Senegalese homes and communities.

Safer homes
Naked flames inside dimly lit homes tell their own story, but the real dangers of candles and oil-based lamps are more pernicious: kerosene is a “silent killer”, its noxious fumes contributing to a long list of coronary and respiratory problems.

Enhanced education
Maguette Sarr, 54, shares her windowless bedroom with her 12-year-old daughter Mody. Mody and her cousin Maty Seck, 13, used to finish school, “help with the housework and then study in the bedroom by candlelight”. Today, they learn their favourite subject of “calcul” (arithmetic) beneath a solar lamp, which has led to improved schoolwork and given Sarr peace of mind: “They would read in the evenings until they fell asleep. With the lamp, that is OK, with the candles, I was worried.”

Without having to strain their eyes or inhale smoky fumes, children can study longer and enhance their academic prospects. Assou and Biram Ciss, eight and nine, who live nearby Mody and go to the same school, now look forward to their homework with the additional hours of light solar provides.

Productivity boost
The productivity boon from elongating “daylight” is particularly felt among rural women, who are traditionally responsible for cleaning, cooking and caring for children. With solar, these duties are simpler and quicker to complete, making it easier to pursue economic activities, such as jewellery making or weaving.

Aicha Sow, 28, helps run a boutique (convenience store) in the dust-strewn backstreets of Khaye Sérère. While food essentials are sold from one side of the boutique, Sow uses the other to sell beauty products. Installing an SHS-powered lamp has given Sow “more time to sell” her products – from shampoos and soaps to fabrics and handbags – while also making it easier to find stock.

The old western complaint of not having enough hours in the day assumes a whole new meaning when productivity is governed by what time the sun sets. On Aissatou Ciss’s rooftop, the 70-year-old wipes clean her rectangular solar panel as it stares down the Senegalese sun. This small chore is worth it for the domestic benefits, she says, as “you [now] know what you are doing. You can see the counters. You know what products are in the kitchen – you can identify each one.”

Health help
As the village marabout (religious teacher and traditional healer), 77-year-old Abdoulaye Ciss gives advice to villagers and treats them for headaches, stomach aches or body pains. His eyes – like his room – light up when discussing his solar lamp, as he “can now help [villagers] later in the evenings”, when before there was “nothing to do”.

Social benefits
Producing brighter, safer, cleaner light is not the only trick these solar systems have up their sleeve. Small electrical items, such as radios, fans and electric shavers in barbershops, can be easily and securely charged, although the ports are mostly used for mobile phones. Rural villagers use mobiles for their economic as well as social benefit (farmers check market prices and pay for services with mobile money, for instance), as well as for their torches, music players and cameras. Without electricity, though, their utility is blunted.

Ibrahima Ciss used to travel 1-2km every few days to charge his phone and conserved its use at home. Now, it’s always on and by his side, which means he “receives information very early” and can react quickly to village issues that require his attention.

Environmentally friendly
He also used to buy lots of disposable batteries for torches, but his SHS has a rechargeable battery that lasts for 3,000 cycles (3-5 years). As such, harnessing the power of the west African sun improves both villagers’ wellbeing and that of the environment, by reducing the need for batteries and kerosene lamps, which produce around 200kg of CO2 each year. In a continent at the front line of the climate-change offensive, altering local people’s mindsets about energy usage is the natural counterattack.

Affordable, reliable and sustainable energy is Oolu’s raison d’etre. Since its foundation in 2015, Oolu has used its locally focused business model to deliver 35,000 solar systems to rural west Africa, benefiting more than 300,000 previously unserved people.

Now, a UK-based investment platform, Energise Africa is aiming to help firms such as Oolu boost their social and environmental impact, while also providing a potential return.

It raises funds to lend to businesses in different countries in sub-Saharan Africa. Investors can participate by investing in the different companies through bonds offered by Energise Africa.

The upside is the potential returns are higher than you would get compared to other returns in the market, and the investment is helping African communities. The downside is the risk is higher because you are investing in a company and your cash is not protected by any UK government safety net. If the company collapses, there is the potential to lose everything.

All Energise Africa projects have been launched to address the problem of energy access for low-income families and businesses in sub-Saharan Africa – the minimum investment is just £50, making it widely accessible. Energise Africa bonds can also be held within an “innovative finance” Isa, meaning that people can also use part or all of their yearly £20,000 Isa limit and benefit from tax-free potential returns.

From boosting academic performance and saving money to enhancing safety, security, health and happiness, solar energy access has an outsized impact on those living off-grid in sub-Saharan Africa.

Standing outside his two-room concrete home, mango trees and rain water-filled urns glowing beneath his solar-powered spotlight, Ibrahima Ciss explains the profound effect. As to what’s the best part of having electricity? Simple: “It’s having electricity.”

Oolu Solar Is Taking On Nigeria’s $2 Billion A Year Solar Home System Market

An Oolu agent on the way out to service solar home systems in very remote regions, 2017

One in two Nigerians have limited or no access to the electricity grid, according to the Rural Electrification Agency (REA). The majority of those without electricity are in rural Nigeria where the access rate is about 36%. As of 2016, about half of Nigeria’s population was estimated to be in rural areas. The typical scenario in many of these communities is to depend on kerosene, generator kiosk (cell-phone charging) and battery-powered torches for their energy needs. This has negative effects on their health, environment and productivity levels.

Renewable energy presents a reliable alternative, specifically solar home systems. They are not only clean and healthier, but they are also more cost-effective compared to available alternatives. Oolu Solar, an off-grid energy startup which originally started in Senegal is looking to provide rural households in Nigeria with affordable solar home systems which meet their basic power needs. Early in 2018, the company started piloting its products in South-West Nigeria states like Oyo, Osun, and Ekiti. Oolu Solar is one of the solar startups now focused on providing access to clean energy to the 150 million people in West Africa without electricity. So far it has sold more than 34,000 units to rural customers across Senegal, Mali, and Burkina Faso since its launch in 2015.

Nigeria’s Policy Environment

One of the barriers to energy access in Nigeria in the past was an incoherent policy environment. There was no holistic strategy to take advantage of power supply alternatives like mini-grids and solar home systems. In 2015, Nigeria took a major step to solve the problem by developing the National Renewable Energy and Energy Efficiency Policy. It also created the National Renewable Energy Action Plan and Mini Grid Regulations. Additionally, the Nigerian Rural Electrification Agency (REA) has put together the Off-Grid Electrification Strategy with the aim of increasing electricity access to rural and underserved clusters.

Although there has been an implementation gap, these major steps have created a more enabling environment for mini-grid developers and solar home system startups like Oolu. It has been working with the Rural Electrification Agency (REA) and its partners to ramp up the adoption of clean energy in the country. “We’ve been pleased with the conversations and work that we have already done with the Rural Electrification Agency in Nigeria. Particularly in terms of helping us better understand the regulatory impact of the environment as well as providing data that’s been helpful in launching and scaling our business here ” Dan Rosa, Oolu Solar’s CEO says. “Broadly speaking, governments in the region recognize that these solutions are essential for households whether they are urban, peri-urban or rural. They are looking to create an enabling environment although some countries have moved faster than others.”

While this is largely true, the recent increase in tariffs on solar panels has cast a shadow over the Nigerian government’s seriousness to expand access to energy in the country.

Income Levels & Energy Savings

The income levels of rural Nigerians are such that they can only spend little on energy. Their energy demand is also quite low. This is one of the reasons rural communities are typically not connected to the grid in the first place. Electricity companies do not find them as profitable. Many rural households spend about $6/month (₦2,100/month) on kerosene or battery powered torches according to the REA. The REA estimates that rural dwellers will save about $4.50/mth per household with solar home systems. One of the challenges is that clean energy products have largely been out of reach for these households.

To connect these hard-to-reach communities, Oolu builds agent networks in the countries where it operates. Its agents are full-time employees who also provide after-sales support to its consumers given their proximity to them. This means they can quickly visit a consumer’s home when the need arises. This typically reduces the amount of abandoned and failed solar systems. For grid-connected power, the experience for many in the country is that service delivery is generally poor. It’s tough to get staff members of these power companies to attend to technical issues. When they do visit, it’s usually to disconnect consumers or chase them for money.

Oolu Solar is providing two set of products that match the income levels of rural Nigerian consumers. It is also offering flexible payments options like annual and monthly payments in addition to outright purchase. This provides more rural households an opportunity to afford its solar systems depending on their income levels. Oolu is offering solar TV systems to peri-urban households and the rural ones whose energy needs are in the high spectrum.

There are questions about the profitability of solar home systems, however, this has not stopped the surge of investment into the sector. It has seen more than US$360 million in investment across the continent in the past five years. Oolu Solar itself has so far raised about $3.2 million with the latest being an undisclosed amount from GAIA Impact. Aggressive customer acquisition by off-grid solar startups means they need to provide credit to consumers. This puts a strain on operational cost and profitability. At the initial phase, companies depend on the investment they receive to fund their growth. The IFC estimates that such companies, who provide credit corresponding to 50 – 90% of the solar system’s purchase price, may do so for about 8 – 15 years before they begin generating their own cash. Some startups like Oolu are choosing to focus on specific aspects of the value chain to keep costs low. Oolu focuses on distributing solar home systems and is not involved in manufacturing them.

Payments

An important element of the pay-as-you-go (PAYG) model Oolu Solar and other solar startups offer is mobile money. It enables them to easily collect payments from their consumers. Many of these consumers are typically unbanked. In Kenya, mobile money has helped connect about 500,000 off-grid households with basic electricity. In some parts of West Africa, mobile money solutions are also now being used. Nigeria is one of those markets where it barely exists. According to EFInA, mobile money penetration in the country was 1% in 2016. Lack of widespread and efficient payment solutions has been a headache for local investors looking to finance the off-grid energy sector. It has also limited solar startups interested in serving rural customers.

Oolu Solar is attempting to work around the payment infrastructure challenge. “We are working with as many payment channels that exist in Nigeria. You have agent networks, you have banks that have USSD codes etc. So we are exploring all possible payment channels. We are fortunate that some of these agent networks are in rural areas.” Doseke Akporiaye, Oolu Solar’s Nigeria MD says. The company’s approach is to develop partnerships with the financial institutions, in some cases microfinance banks, that are closest to their consumers. Doseke further explains that there’s also a cultural issue as some customers still like to deal in cash despite the digital platforms that exist.

The payment infrastructure hurdle poses a challenge to Oolu Solar’s business. Things could, however, change very quickly with the recent introduction of Payment Service Banks (PSBs) by Nigeria’s Central Bank. The CBN has issued draft guidelines for the PSBs. Their key objective is to enhance financial inclusion in rural areas. They are expected to increase access to deposit products and payment services by leveraging mobile and digital platforms. Telcos, retail chains and mobile money operators would be allowed to set up these PSBs.

The low penetration of mobile money was due to CBN regulation which limits the provision of mobile money solutions by mobile network operators (MNO). The concern was that MNOs will threaten the retail banking business of commercial banks if they are allowed to take part in the sector. The PSBs policy framework seems like an attempt to address the issues and allow MNOs to fully participate in mobile money.

Despite the challenges it faces, Oolu Solar is optimistic about the opportunity to successfully capture Nigeria’s $2 billion a year solar home system market. It is not alone in this quest. Tanzania-based Zola Electric announced its expansion to Nigeria in September 2018. It is hoping to reach 1 million households and businesses within the next three years. The success of these companies, however, will largely depend on their ability to quickly reach as many homes as possible with their solar systems. They will also need to ensure that they put structures in place to keep payment defaults very low. Their success is very critical nonetheless. It will provide the 20 million households in Nigeria who lack basic electricity with access.

Gaia Impact Fund Announces Investment In Leading West African Solar Company, Oolu

Investment will strengthen Oolu’s existing presence in off-grid regions and drive expansion to new West African markets

GAIA Impact Fund, a Francophone-focused venture fund specializing in clean energy, today announced a strategic investment in Oolu, a Senegal-based Y Combinator start-up and one of the fastest-growing solar companies in West Africa. The investment has been announced as part of a Series B fundraising round that will close early next year.

Gaia’s investment will further strengthen Oolu’s market-leading position in Senegal, Burkina Faso and Mali. The funding will enable Oolu to build on its strong business infrastructure through investment in its IT systems and software capabilities, and provide additional working capital to support growing business needs. The investment will also allow Oolu to accelerate its regional growth plans, reaching further untapped markets across West Africa.

Gaia focuses on renewable energy investments, and has a strong track record in the solar energy sector. The Fund has supported several start-ups, SMEs and infrastructure projects since it was established in 2016, and has previously invested in solar companies in Sierra Leone, Cameroon, and Tanzania. Gaia balances ROI with social and environmental impact, holding all prospective investments to its rigorous selection criteria.

Oolu was launched in Senegal in 2015, and has sold more than 34,000 solar home systems (SHS) in less than three years to rural customers across Senegal, Mali, and Burkina Faso. As one of the fastest-growing SHS distributors in West Africa, Oolu is consistently able to adapt its customer offering to local market dynamics. With a Dakar-based management team and more than 130 full-time employees, Oolu's team is one of the most experienced in West African solar.

The off-grid solar industry is one of the fastest-growing in Africa. The sector has seen more than US$360 million in investment across the continent in the past five years and continues to grow rapidly due to a drop in component and storage prices. Given the high barriers to entry in this sector, Oolu’s established position means it is well-placed to capitalise on this continued growth in the wider market.

Last October, Oolu closed its Series A fundraising, which was led by Persistent Energy Capital (PEC). PEC and Gaia are committed to supporting the company both in further fundraising rounds and in driving strategic initiatives.

Guilhem Dupuy, Investment Manager at GAIA Impact Fund, commented: “We have followed Oolu for some time, and are delighted to announce an investment into one of the most promising companies of the solar homes sector in West Africa. Oolu’s impressive growth has been coupled with lean operations and best-in-class customer support, giving us great confidence that Oolu will successfully scale across the region.”

“Our two companies are strategically and philosophically aligned. Oolu’s commitment to offering high-quality, affordable solar products to ultra-low-income households is vital in rural areas that are not reached by public services or formal grid infrastructure. Oolu’s work ensures these communities are no longer left behind, and we expect our investment to play an important role in growing the company’s regional presence, so that ever more underserved customers can benefit from life-enhancing solutions.”

Dan Rosa, Co-Founder and Chief Executive Officer of Oolu, commented: “We’re thrilled  to have Gaia join us as an investment partner, adding to the strong investor base we have already accrued. We’ve always been selective in the partnerships we form. Given Gaia’s primary focus on tackling energy poverty, its track record in the solar energy sector, and its established presence in French-speaking West Africa, we see this partnership as a natural fit.”

Nilmi Senaratna, Co-Founder and Chief Business Development Officer of Oolu, commented: “Ensuring a positive social and environmental impact is paramount to both organizations. We know that Gaia’s support will accelerate our efforts to improve the lives of rural customers across West Africa in the months and years ahead. We look forward to collaborating with Gaia and furthering our vision of becoming the leading energy and financial services provider to millions of people in the developing world.”

About GAIA Impact Fund

GAIA Impact Fund is a French impact fund initiated by a team of seasoned entrepreneurs and philanthropists from the renewable energy & impact finance sectors with the aim of kickstarting innovative energy access ventures where energy is needed the most: among off-grid populations in emerging countries. Gaia finances and supports the growth of start-ups and SMEs which have a positive social, environmental and economic impact on their territory. As an active investor, Gaia establishes long-term, trust-based relations with its partners to fuel their sustainable growth through tailor-made strategic, technical and financial support.

Oolu wins Hogan Lovells Solar Innovation Award for their work in rural Mali!

The winners of the Hogan Lovells Community Solar Innovation Awards 2017 were revealed today during the 2018 SEED South Africa Symposium in Pretoria. They are:

Frontier Markets, India – a last-mile sales, marketing and after-sales service distribution company bringing clean energy solutions to rural India. A growing network of rural women are empowered with clean, safe energy access and training to become micro-entrepreneurs promoting solar energy systems.

Grupo Fenix, Nicaragua – runs courses that target students and professionals to facilitate information exchange on building and solar-technology. Clients participate in hands-on activities such as building solar cell-phone chargers and installing photovoltaic systems in rural homes that lack access to electricity.

Kalpavriksha Greater Goods, Nepal – alleviates energy poverty in rural Nepal by empowering women entrepreneurs to sell clean energy products, stimulating economic growth. Women entrepreneurs are given extensive business training and mentorship support.

Kumudzi Kuwale, Malawi – supplies charging stations in villages where locals can rent solar lamps, batteries and charge mobile phones; ensuring basic electricity is supplied at affordable costs in financially sustainable ways.

Masole Ammele, Malawi – promotes the use of solar water pumps in organic fish farming and production; and provides market linkages to fresh fish, dry fish and fish fingerlings through working with organised local household farmers.

Oolu Mali, Mali – the first pay-as-you-go distributor of off-grid solar energy in Mali. The unique payment infrastructure is complemented by entrepreneurial thinking which is geared towards promoting employment and gender equality in rural Mali.

SAMWAKI, Democratic Republic of Congo – this rural women’s organisation runs a solar powered radio station Radio Bubusa and provides its listeners with portable solar radios and solar charging stations and runs an agro-ecological cooperative COOPAEKI that focuses on coffee agriculture.

Solar Freeze, Kenya – provides smallholder farmers in Kenya access to portable solar cooling units to prevent post-harvest loss, thus providing farmers and traders the leverage to move and store smaller quantities of fresh produce more frequently.

South Asian Forum for Environment, India – uses solar energy to ensure a supply of safe drinking water for the urban poor, creating a women centric end-to-end solution for climate adaptive basic amenities and sanitation with minimal emissions.

Village Energy, Uganda – designs and installs customised solar installations for businesses, agriculture and community institutions that lead to improved livelihoods, job creation, and access to services. With its traveling academy, it trains rural youth and women as solar technicians to find opportunities within the solar industry.

“These awards demonstrate the incredible innovation in capturing and using solar energy to make a real difference to the lives of people in some of the world’s poorest areas,” said Scot Anderson, Hogan Lovells Energy and Natural Resources Group Judge and Global Head. 

As overall winner, Village Energy will receive a $10 000 financial award.

“This is a validation that our hard work over the years is finally being recognised globally. This prize will really help us to increase the vocational training we are providing to rural youth and women. We want to develop rural businesses which continue to be neglected – we want to train them, finance them and really get them to be more productive,” said Abu Musuuza, Village Energy Limted Co-founder and CEO

DISRUPT AFRICA: Senegalese solar startup Oolu raises $3.2m funding

Senegalese solar startup Oolu has secured a US$3.2 million Series A funding round, which will support its growth and strategy as it seeks to address the energy needs of more than 150 million people lacking access to electricity in West Africa.

Founded in 2015, Oolu provides in-home solar kits composed of three adjustable lights and two USB plugs, powered by a battery that holds a charge for up to six hours with maximum output.

For a low monthly fee, paid through mobile money, the Y Combinator-incubated Oolu installs the system and performs any necessary maintenance, including free battery replacements and system upgrades.

The US$3.2 million funding round was led by Persistent Energy Capital (PEC), and was joined by Y Combinator (YC) and other seed investors. Oolu will use the money to further invest in its current operations in Senegal and Mali, and expand into a third market in 2018.

“This fundraise is an important milestone, and a further boost for us at a very exciting time for the company where we see real and significant opportunities in the West African markets,” said Da osa, co-founde n hie xecutiv fficer (CEO) olu.

“Today’s announcement gives us great confidence that we are on the right track in pursuing our goal of becoming the leading energy and financial services provider in West Africa. We’re delighted to have the support of quality investors like PEC and Y Combinator, and we look forward to working closely with them as we continue to grow the business.”

Dir uench, o-founde n artne EC, aid the Oolu team had impressed the firm with its ability to define a strategy and then execute on it.

“We believe Oolu has what it takes – team, vision, technology – to become a trusted provider of products and services for millions of African households. We are excited to be a part of Oolu’s story as they deliver financial and social returns,” he said.

Y Combinator partner Geof alston said Oolu had grown impressively quickly in one of the most unpredictable and difficult markets in the world, with the team proving it was strong enough to succeed in a challenging and fast-paced emerging market.

“We funded them precisely because those are the qualities that they will need to make their business successful, and they are already on the right path,” he said.