Umlilo Energy Taps Into The Diaspora Remittance Market To Drive Residential Solar Adoption in Africa
The rooftop solar market is growing rapidly in several markets and continues to break records in terms of megawatts installed per year. The Australian market is a fine example of what can be achieved in the home solar market. Australia’s Ministry for Industry, Energy and Emissions Reduction in March of this year reported that 2021 was the fifth record-breaking year in a row for rooftop solar in Australia. In 2021, Australians installed approximately 380,000 new systems with a combined capacity of 3.2 gigawatts (GW). More than 3 million rooftops in Australia now have solar, bringing the total installed capacity to an awesome 17 GW! “Last year $7.4 billion or $284 per person was invested in renewable energy in Australia. This puts us ahead of countries including Canada, Germany, Japan, France, China and the United States on a per person basis,” Minister Taylor said earlier this year.
Another market that is breaking records is the United Kingdom. In the UK, 164 megawatts (MW) was installed on home rooftops from January to June this year. This total, installed in 6 months, was more than the total MWs installed in the whole of 2021! Despite all the sunshine across the African continent, we have not seen this level of growth in most parts of Africa, especially in countries in southern Africa such as Zimbabwe, where citizens face daily outages for hours as the utility company struggles to meet demand. The utility company therefore has to implementing a load-shedding program. Load-shedding is a controlled process that responds to unplanned events (such as demand exceeding available capacity) in order to protect the electricity power system from a total blackout.
Financing platforms for urban rooftop solar maybe the missing link in the quest to accelerate the adoption of rooftop solar. Although the prices of solar panels and battery storage have gone down significantly over the past decade, the total upfront cost of systems required by most middle class urban homes in places like Zimbabwe are still quite expensive for a lot of families. An example of popular configuration in this segment would have a 3 kVA hybrid inverter coupled with 5kWp of solar panels and a 4.8 kWh LFP (LiFePO4) stationary storage battery pack. These systems are used to power essential loads during load-shedding. Essential loads include Wi-Fi routers, refrigerators, TVs, laptops, lights and booster pumps to pump water into the homes from water storage tanks located in their backyards. Many homes in the major urban centers also experience water rationing and therefore usually have 5,000 to 10,000L water storage tanks in their backyards.
The majority of people in developing markets generally have lower incomes than people in developed nations, meaning that getting rooftop solar is out of reach for many families. There is also a very limited choice of financing options. Credit vetting potential customers in the local market is also quite challenging. Umlilo Energy is tapping into the growing remittance market to drive residential solar adoption in Africa, starting with Zimbabwe. People based in developed markets that have higher incomes are most likely to be in a much better position to purchase these solar solutions for their parents and other family members back home.
Diaspora remittances are growing on the continent however, most of them are channeled towards supporting family and friends back home with daily expenses such as transport, groceries, school fees, and medical expenses. While some remittances are channeled to household developmental projects, a significant percentage of the remittances still goes towards household consumption. There is an opportunity to increase the dividend of remittances by shifting the pendulum away from consumption and towards investments in development projects that generate income. Investments have the potential to create resilient and sustainable income which is not eternally dependent on the remitter’s capacity to continue earning income and sending money back home. This is an important step towards breaking the dependency syndrome among recipients.
Umlilo is positioning itself to drive and promote the sustainable and productive use of remittances towards the renewable energy sector and other investments. This could help play a big role in unlocking the full potential of the residential rooftop solar market on the African continent. Its first market is the UK-Zimbabwe corridor. There are a large number of Zimbabweans in the UK who send money back home. Diaspora remittances are now the number one source of foreign currency in Zimbabwe. Zimbabweans working in the United Kingdom along with other Zimbabweans that are based in the Southern African region, the United States of America, and other places sent $1.4 billion to Zimbabwe last year. Umlilo will soon add other corridors in the near future.
Umlilo was established in 2019. So far, most of its clients are middle-aged Zimbabweans working in the United Kingdom that are paying for installation of solar and battery storage systems for their retired parents back home. These systems are being installed both in the cities and as well as in the rural areas. The availability of quick credit score checks on platforms such as ClearScore in the UK makes it easier for Umlilo to vet its potential clients when offering payment plans over a certain period.
Umlilo has grown via referrals and word of mouth over the years and is now looking to scale its operations. Umlilo also wants to be more active on other channels such as social media groups. Members of the diaspora community usually have many chat groups on Facebook and WhatsApp where they discuss issues about their home country as well as any opportunities.
Umlilo is also finalizing plans to add modular and portable solutions to cater for people living in rented apartments. Umlilo is also working on financing what it calls “business in a box” solutions. An example of this is a solar water pump kit that comes as an almost plug-and-play solution for farmers who are in the horticultural sector. These plug-and-play kits will help rural farmers who have access to land to be able to use their half a hectare plots to grow popular cash generating crops such as paprika. The horticultural sector has a good support system from out-grower schemes supported by large local and international organizations. This support system and ready market of off-takers for the crops enables small scale farmers to be able to profitably invest in this area of the agricultural economy. It will also enable more farmers to get regular income to support payments for these financed “business in a box” solutions.
All images courtesy of Umlilo
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