Revolutionizing Africa’s Energy Access Sector

Published 1 year ago
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As the sun rises on the horizon, casting golden rays on the shores of Lake Victoria, a group of fishermen row their boats towards the Lolwe island landing site with optimistic smiles lighting their faces.

To these fishermen, the new day has ushered a new dawn of hope. “We went fishing the whole night to test the new e-boat,” says Yasin Kawuma. “When we tested the two engines, the results showed us that if you are to charge the batteries for the electric engine it would cost you 7000 Ugandan shilling (US $2) to get enough charge for a trip, unlike the petrol engine, which requires 7 litres of fuel and that would cost 35000 shillings (US $10).”

That price has since gone up 70%!

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The population of the island is living in abject poverty with limited access to electricity and clean water.

The newly completed ENGIE Equatorial mini-grid site is uplifting the island economically and socially. The site features an industrial park providing fish processing, water purification and ice manufacturing, as well as electric vehicle charging stations for electric boats and motorcycles. The opportunity now given to the inhabitants of the island is a big leap toward poverty alleviation. This is especially crucial in light of the increasingly volatile fuel prices and dwindling fish stocks, the latter being the residents’ source of livelihood.

Energy access remains a huge challenge for Africa. According to the Africa Chamber Report on the state of African Energy 2022, as of 2020 only 55% of Africa’s populace had access to electricity. Doubling of total capacity will be required to achieve universal access by 2030.

“Energy brings everything from clean water to preservation of medicines as well as value addition on agriculture. The social impact element is unquestionably part of the equation, there’s also a substantial investment opportunity in delivering energy and other infrastructure services to rural communities,” says Equatorial Power (EP) CEO, Riccardo Ridolfi.

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Meeting Africa’s rising power demand for urbanization, industrialization, population growth and economic growth calls for accelerated efforts by governments and the private sector; it also requires substantial investments in innovative business models and renewable energy.

EP has an innovative business model that promotes local growth, while focusing on the productive use of energy with an integrated service offering.

“We think that it is not just about electricity, but everything that electricity enables and brings with it,” says Ridolfi.

EP is a Ugandan-based decentralized energy infrastructure company, with a customer growth-centric focus and a holistic service offering.

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The company currently operates in Uganda, Rwanda and the DRC with over 6,000 active smart meter connections, serving over 30,000 people.

“Ultimately, our objective is to invest substantially in the community in the early stage so that the same community can become wealthier and consume both electricity as well as more goods and services. By so doing, these customers will generate higher revenues for EP while also creating wealth and realizing profits for themselves,” says Ridolfi.

EP invests in two verticals. The first vertical is a fully integrated, completely “off grid” model. Through this model, EP builds solar hybrid power plants complete with Productive Hubs that offer services like water purification, ice production, agro-processing and electric mobility.

The second vertical involves investments at the fringe of the national grid, in partnership with the utility while rolling out mini-grid assets on the edge of the grid. This is done with the objective of interconnecting at a later stage and continuing to operate in partnership with the utility.

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EP’s pilot project in partnership with Umeme and EnerGrow–a productive asset finance company–was completed near Kampala (Kiwumu) under the ‘Utility 2.0’ initiative. All customers were connected within 3 months–versus 3 years from the baseline study site–and within 6 months from launch, demand was up 400% against the baseline; proving just how much latent demand there is for productive energy use, and showing that collaborations of this sort not only accelerate energy access, but also make it more bankable.

EP also leverages partnerships with companies such as EnerGrow, providing skilling and financing for productive use assets to local entrepreneurs, who then have access to machines and tools through which they can profit from electricity access.

The company has deployed five projects that include the interconnected model with UMEME in Kiwumu, as well as the recently launched Lolwe Island mini-grid that tested the company’s fully integrated service offering with ENGIE. In Rwanda, the Gakagati pilot project is testing a distributed mesh technology, while in DRC EP has its first two pilot projects on Idgwi Island, at the Bugarula and Prolasa sites. With these five project deployed, EP is now ready to scale.

Notwithstanding the growth potential of the energy industry in Africa, challenges that could hamper its realization still exist.

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“We are dealing with infrastructure, but because of the novelty of the asset class, there is still uncertainty among investors and it is difficult to attract the right type of long-term, low yield capital – as is instead common for other infrastructure asset classes.”

“There’s a lot of talk about impact investment, but it’s very difficult to find the right capital partner; these funds still want relatively high returns. As such there needs to be a little bit more willingness from large investors to accept that this is a long term play that can yield a lot but only if you develop the customer,” says Ridolfi.

Political willingness also plays a fundamental role.

“On the government side, all governments will call energy access a priority but that is not translated into the right type of fiscal, financial and regulatory support. So if the investors can commit for the long term and the governments can commit to facilitating the short term, this sector will realize its full potential.”

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With an anticipated population boom and continued economic growth, on top of Africa’s large infrastructure gap, energy demand in sub-Saharan Africa is expected to more than triple by 2040.

Equatorial Power intends to play its part with plans to electrify the entire of Lake Victoria and large parts of DRC, as well as expanding to other African countries like Ethiopia, Malawi, and Mozambique.

“We are aiming to close funding for the next forty sites in the next two months and are currently raising capital at the corporate level with a Series A round. The 12-month target is to grow the team and reach over 120,000 beneficiaries across four countries.”

“We aim to become the go-to pan-African decentralized energy player, truly making a difference for people for the long term, far beyond electrons.”

DISCLAIMER: Brand Voice is a paid program. Articles appearing in this section have been commercially supported.