Just last week, an African based solar system startup, Off Grid Electric, raised $55 million in Series D round. This is one of the largest fundraising rounds ever and it was led by Helios Investment Partners, including GE Ventures, the venture capital subsidiary of General Electric Company.
A new World Bank report “Off-Grid Solar Market Trends Report 2018” recently released states that more than $500 million has been raised from investors in the past two years showing increasing interest and commitments in this sector. In 2017, the global off-grid solar (OGS) sector provided improved electricity access to an estimated 73 million households, or over 360 million, transforming lives that were previously reliant on kerosene and solid fuels for most of their lighting needs.
The Pay-As-You-Go (PAYGO) segment has been the main attraction of investors in Sub-Saharan Africa. From 2012 to 2017 PAYGO businesses raised USD 773 million, equal to ~85% of all funds raised. These investments are highly concentrated, with just four companies accounting for 67% of total PAYGO investments.
Here is a picture of PAYGO players by country, and geographic share of the PAYGO market
East Africa has accounted for over 80% of the decline in the number of people without access in Sub-Saharan Africa since 2012. And has been the result of three major factors:
- aggressive grid expansion (especially in Kenya and Ethiopia, which are on track to reach near-universal access by 2030 according to IEA’s New Policies Scenario projections),
- a relatively stable regulatory and investment climate, and
- increasing availability of decentralized systems, mainly OGS (especially in Kenya, Tanzania, Ethiopia, and Uganda)
Progress has been slower in West and Central Africa, which together comprise about 50% of the total off-grid population in Sub-Saharan Africa. Though we have outliers like Ghana (where electricity access increased from 45% to 84% between 2000 and 2016), Senegal (increased from 30% to 64%), and Gabon (increased from 31% to 90%)
Overall, the OGS sector is expected to provide improved current energy access to 740 million people in 2022, compared to 360 million today.
So is OGS the panacea to the electricity problem in Sub-Saharan Africa? Not at all but I think it helps. And we really do need every piece of an initiative to ensure that the whole of Sub-Saharan Africa is fully lit in the nearest future.
Read more here >> innovation village