Africa, a great innovation laboratory for access to energy for all14/11/2016
From October 19th to 23rd, the "Land of African Business" – a think tank meant to produce new models for development prior to the COP 22 in Marrakech this December – was held in Paris.
ENGIE Rassembleurs d’Energies was a sponsor of this event. Laure Vinçotte, CEO of Rassembleurs d’Energies, gave a presentation to talk about access to energy in Africa.
Hello Laure. What is the issue with access to energy in Africa?
Let's start with two figures: 30% of Africa's population consumes 80% of all of the energy produced on the continent. One could say that on the one hand, part of the African population has highly unreliable, very expensive access to energy.
On the other hand, the majority of the population has no energy access because it is not connected to any network.
We also already know that in the near future, the solutions currently in use to provide energy access energy will not be enough. We don’t have the means to develop infrastructure on a massive scale in Africa, especially since overall population densities are low, highly dispersed and with long distances between inhabited areas. As such, it is difficult and very expensive to reach the customer where he or she lives.
What new solutions for providing energy access are being developed in Africa?
We’re seeing solutions that are addressed to people who have no access to electricity either because they can’t pay to be connected or because there simply is no network.
There are two general types of solutions in this case: ones for individual consumers and mini- or micro-networks.
Individual solutions can provide for people’s basic needs: lighting, charging mobile phones and small electrical appliances like radios or small televisions. In this type of solution, the customer is a single home. They consist of individual solar systems that combine relatively simple technology with a very innovative business model. They are developed by contractors who have integrated the entire value chain, from design to post-sales services for their clients.
What is very interesting about these solutions is that they rely on existing telecom infrastructure, which allows them to communicate with their customers and, in turn, for the customers to pay them. In Africa, mobile banking has developed dramatically, to the point of supplanting conventional banking systems, since it is better adapted to the needs of the population.
These individual solutions can really change people's lives because they are cheap and safe.
Take the example of the solution offered by Fénix International in Uganda: a small solar home system that consists of a 17-watt panel, a battery and a computer system that can remotely monitor the product. It can accommodate four LED lamps, a phone charger, a radio and a flashlight. Fénix currently has 80,000 customers!
Other companies are now breaking into this market because it deals with real needs, and provides a way of handling the difficulties of last-mile distribution.
One coud say :new businesses, new markets, new customers, new categories of stakeholders.
ENGIE Rassembleurs d’Energie acts as a corporate impact investor for entrepreneurs. It’s an impact investment fund specifically focused on providing access to energy, and is now a minority shareholder in some of these companies.
Rassembleurs d’Energies selects the companies it invests in based on their business models, the viability of their solutions, and the innovative ways they implement them, but also – and crucially – in terms of their social impact. This is a decisive criterion for us: without social impact, we do not invest.
The other category of solutions corresponds to the so-called “collective” solutions.
There, the customer is not the home but rather the village, the community, the local authority. In these cases we are dealing with mini-grids and mini-networks. This always involves decentralized energy generation and renewables, whether solar or another source. In these cases, the client will pay a subscription fee to connect to the network and a bit more depending on how much they consume.
There are several different kinds of business models: for example, the customer can prepay for the energy they consume.
Something important to keep in mind about these mini-grids is that the power distributed is much more abundant than for individual solar systems. They allow customers to use energy in highly productive ways: fridges, welding machines, garages, shops, mills, etc. So they contribute to developing the economy.
Examples of this type include the PowerCorner project, which was developed by ENGIE Tanzania, and Ausar Energy, which Rassembleurs d’Energies has invested in.
So both types of solutions can coexist?
We’re currently seeing more entrepreneurial activity in the field of individual systems. Demand is massive, it is very cheap for the consumer, and the benefits are immediate.
There are fewer companies developing mini- grids. Most are developing pilots to test their business models, but there is clearly a lot of potential and the field is very promising.
Via Rassembleurs d’Energies, ENGIE is a shareholder in some of the decentralized solutions currently being implemented by private-sector entrepreneurs, particularly in Africa but also in India, Mexico and soon in South East Asia.
A separate roundtable focused specifically on the importance of regulatory framework for promoting new ways of providing access to energy.
Of course, Africa is not a uniform place: it is a mosaic of 54 countries with varying demographic, human and especially regulatory contexts.
Today, some African countries are clearly more favorable to private sector solutions, thanks to their entrepreneurial culture or legislation. If ENGIE was able to develop PowerCorner in Tanzania because the conditions, market needs and regulations were favorable to developing such initiatives. In Tanzania, entrepreneurs can set their own tariffs, whereas in other countries rates are imposed. This makes demonstrating the economic viability of the project more difficult.
Providing access to energy in Africa is a huge challenge, and there are considerable needs, but also great opportunities. All of the solutions that we are developing with entrepreneurs to provide energy access for most remote populations involve innovations that could be useful for us elsewhere, on other continents and even here in France. Africa is therefore a formidable laboratory for innovation on energy access for all.
Source: Thomas Bardy