18 AFRICAN ENERGY
Off-grid energy improves rural lives
New off-grid energy solutions hold the potential to provide much of Africa’ s currently marginalised rural population with access to affordable electricity.
By Stanbic Bank
Off-grid energy solutions could allow rural communities to access affordable electricity.
To date, funding off-grid solutions on a sufficiently large scale has inhibited the potential of these solutions to transform Africa’ s rural economy.
In Kenya, about 50 % of the population has access to electricity and in rural areas, it is as low as 5 %, with firewood accounting for 77 % of the total energy consumed. In Uganda, about 14 % of the population has access to electricity. This slips to 7 % in rural areas where the bulk of electricity is supplied by generators, car batteries, or solar photovoltaic units— not the national grid.
“ Beyond electricity generation, building and maintaining extensive and expensive distribution networks in Africa’ s often large and sparsely populated countries does not make practical or economic sense,” says Stephen Lovell, head: Corporate Financing Solutions( East Africa) for Stanbic Bank, a member of the Standard Bank Group.
Since a large portion of Africa’ s population lives in remote and rural areas, receiving power from the grid could still be decades away.
Business models for at-home off-grid power supply have been in existence for some time, particularly in the US. The ability to take from or supply power into the grid( and pay or get paid for the energy consumed or supplied), coupled with favourable tax treatment on the structure, has created a competitive market for off-grid power solutions.
Africa differs fundamentally from the US in the sense that off-grid, in its truest sense, needs to be just that.“ And also, affordable by households with very low disposable income,” says Lovell. As such, the cost of the basic technology( a few solar panels, light bulbs, a battery, and a phone charger) must be reasonable, and be part of the overall budget a customer can afford.“ This is critical if investment in this innovative technology is to be financed by commercial banks,” he adds.
In East Africa, the combination of innovative technology and finance has come together in a landmark off-grid solar transaction with the prospect to transform African growth.
Stanbic Bank’ s arranging of USD55-million funding in Kenya and Uganda for M – Kopa, the world’ s leading off-grid pay-as-you-go energy company, shows,“ how rapidly and effectively new disruptive off-grid energy solutions can provide affordable energy when coupled with innovative financing solutions,” says Lovell.
What is exciting about the M-Kopa transaction, which is the largest off-grid debt funding arranged by a commercial bank in Africa, is that very soon payment
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February 2018 Volume 23 I Number 12 www. plumbingafrica. co. za