The quest to bring power to the nearly 600 million people without access to electricity across Africa is creating a massive opportunity for renewable energy on the continent.
The electrification of African nations will require some $350 billion in spending, according to some estimates, and new businesses are racing to ensure that the power comes from renewable sources.
It's important that as wealth rises and consumption increases in the region that countries don't replicate the same growth trajectory that has made China one of the world's leading emitters of greenhouse gases.
That's why businesses like Husk Power Systems are already making plans to significantly expand in countries like Nigeria.
Husk plans to develop 500 solar-hybrid micrograms across Nigeria and is targeting services for at least 2 million people in the country by 2026.
The company currently has about 20 micro-grids under development and would need significantly more money to develop the full network that it envisions for the region. But recent studies have said that the kinds of renewable energy grids that Husk develops and operates are the lowest cost electrification solution for nearly half of the grid connections Nigeria will need to fully electrify services for its citizens.
“Decentralized, bottom-up solar-and-storage grids could not only reshape Africa’s energy future but carry important lessons for the next generation of thinking on utility business models globally,” Benjamin Attia, an analyst at WoodMac said in a recent report quoted by Bloomberg News.
These types of community solar and micro-grid development initiatives are happening across Africa. In Kenya, CrossBoundary Energy Access has raised $25 million to finance the development of solar and storage energy systems as part of a plant to invest $150 million into similar projects over the next few years.
That figure is nowhere near the $187 billion that organizations like the International Energy Agency believe will help the world get to universal electrification. But it's a start.
Companies like CrossBoundary Energy and Husk Energy Systems, along with other micro-grid developers like PowerGen Renewable Energy and the energy storage and power developers Zola Electric and Sun King (which just raised $260 million) are creating new opportunities for renewable energy development on the continent.
Not everyone is convinced that all of these companies have the right business models to reach everyone in the African market, or that a one-size fits all approach to the region is the best way forward.
Earlier this year an article in Bloomberg News illustrated the challenges of providing individual solar installations to rural landowners in Africa. Companies that handle the upfront costs of installation and distribution often wind up putting their customers into debt traps that force them to pay far more than the system is worth over its lifetime. Often, financial insecurity means that many of the power systems installed have to be repossessed.
Richenda Van Leeuwen, a former executive director of the UN Foundation’s Energy Access for All, told Bloomberg that she regrets that the emphasis on paygo solar has eclipsed more equitable approaches. “It is a learning process for the companies and the development world, figuring out the very small segment of the market where paygo actually works,” Van Leeuwen, now executive director at the Aspen Network of Development Entrepreneurs, told Bloomberg. “But they shouldn’t be learning their lessons at the expense of the poor.”
Focusing on micro-grids that service communities rather than individual homes could help alleviate the financial pressures on individuals, according to William Brent, the chief marketing officer for Husk Power Systems.
"For us, it’s number of connections, and the mix of those connections," Brent said. "For a community to be able to move out of poverty you have to provide a higher level of energy. These mini-grids and can service communities and you can provide access for people to increase their GDPs in a significant way."