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