Solar is coming into its own. It is here to stay. However, the off-grid solar market is still nascent. Arguably, serving this off-grid solar need, this off-grid market, requires fresh financing techniques.
Africa is so vast that off-grid is normalcy to many families and businesses. But many are still completely without electricity, and many have very unreliable, costly, and dirty energy. Nonetheless, numerous startups and organizations are providing solar solutions in Africa. An interesting example, spotted by pv magazine, is “NVI Energy’s ‘pay-as-you-use’ solar plant at Cheli and Peacock’s Tortilis Camp in Kenya’s Amboseli National Park.” Tortilis Camp, a safari camp in East Africa, is said to be completely powered by solar energy (as of February).
“Financing for the project was set in place by NVI Energy through its Solar4Africa (S4A) platform. Launched in 2014, S4A’s approach to tackling the problem of financing is to supply a ‘one stop shop’ for industrial and commercial customers wishing to have solar installed.”
Through the Solar4Africa platform secured by NVI Energy, this project was successful with good financing.
Pay-as-you-go PV in parts of Africa is being provided in the residential off-grid space by companies such as M-KOPA Solar and Azuri Technologies, but not to businesses and industry.
Furthermore, Elizabeth Muir, head of communications and human resources at NVI Energy, explains a bit more how their model works:
“We have ‘pay by solar,’ where someone rents to own the system where we ask only a minimal upfront cost and take on up to 85% of the price of building. The customer pays for the power produced, and then they own the system at the end of the period. Secondly, there’s the PPA. Or we can do development services where they can buy the system outright.”
Muir also discussed how brainstorming with installers triggered their business solution:
“One issue they came up with consistently was that they had opportunities but when they spoke about the cost, the customer said that they could not afford it. So the installers were having possible sales but couldn’t provide financing solutions. What we do is partner with them and provide those solutions.”
Notably, the off-grid solar market is picking up steam (or sun rays, should we say?). In January, $42 million was invested in off-grid solar companies serving the developing world. That is ~⅔ of all investment in this sector in 2014 ($64 million).
One of those leaders must be Outback Power, a leading off-grid solar supplier. Mark Cerasuolo, in charge of marketing for Outback Power, highlights one reason why they are in the business:
“It’s inevitable. The sun is already the biggest energy source in our little corner of the galaxy. That’s where the plants and every living thing get their energy. The sun is the true people’s power in that it’s free, abundant, and can be used right where it’s harvested instead of requiring complex and expensive transmission paths, and it will ultimately be the source of all our energy.”
Another leading startup in this space is Off Grid Electric. Xavier Helgesen, one of the founders (as well as founder of Better World Books and Indaba Systems), states: “We’re a pioneer of micro-solar leasing.” He explained that Off Grid Electric delivers “50 times more light” for less money than the norm in the markets that it serves. The people it supplies are often using kerosene lamps to light their homes, which is an expensive option that is also dangerous and damages their health.
Image Credit: NVI Energy