Scott Anderson

Weekly Roundup 7-11-14: ‘Going Off Grid’ is going mainstream

“By elevating the issue of energy poverty and launching a coordinated, strategic approach to tackling it, the U.S. government has galvanized companies in-country and around the world to see the African power sector as a viable investment opportunity, and has brought private sector leadership and solutions to address Africa’s development needs.”

That was entrepreneur, philanthropist and African impact investor Tony O. Elumelu last week in the Washington, D.C. publication Roll Call. Elumelu was celebrating the progress of the U.S. Department of Energy’s Power Africa initiative (and pushing the Congress to do a bit more). In a little over a year, the initiative has brought 2,000 megawatts of new electricity online and has secured commitments for another 5,000 megawatts, or about two thirds of its initial goal of 10,000 new megawatts in focus countries Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.

In a very rare show of bi-partisanship, Congress easily passed the Electrify Africa Act earlier this year, doubling President Obama’s initial 10,000 megawatt goal of new power generation, through both renewable and non-renewable sources. Perhaps as important as the current that might be churned out through Power Africa, is the investing framework it aspires to illuminate. By 2018, the companion Beyond the Grid initiative hopes to leverage partnerships with 27 investors and practitioners committing more than $1 billion in new investment into off-grid and small scale energy projects that will add up to, it hopes, 20 million new energy connections for residential and commercial customers. The founding partners are familiar names in the enterprise-based development sphere, including Acumen Fund, Invested Development and the Tony Elumelu Foundation.

Why are these developments so significant? Well, if the U.S. Congress and the president can agree on something (which is more rare than capturing lightning in a bottle) – that must mean it has broad appeal. Indeed, public/private investing in off-grid energy has caught on in a major way. This week we hosted a five-part series, Going Off Grid, which explored new technologies, new business models, and new forms of investing and participation in the developing market of energy infrastructure across Africa.

We know this relatively short series captures just a flicker of what’s happening across the developing world. In many countries, the once inflexible electrical grid is being reshaped and retooled in a creatively destructive process that offers access and ROI with less risk. There are fewer questions about the chicken (demand, last mile delivery, affordability) versus the egg (supply, technology, lack of capital) in this series. Instead we’re seeing much more in the way of business solutions and new pathways for investment.

In our series, Judith Pryor, the vice president for External Affairs at the Overseas Private Investment Corporation (OPIC), described exciting projects in geothermal and biomass generation that show how Africa has become a major business opportunity for U.S. companies. It’s a big focus for OPIC. Her boss, Elizabeth Littlefield, president and CEO of OPIC, recently showcased guidelines aimed at increasing private sector investment in the power sector in developing countries through power purchase agreements.

“Bankable power purchase agreements are key to unlocking private and public sector capital needed to build generation capacity across the continent,” Littlefield said. “Sometimes simple is better and less is more. … This framework helps connect the people who benefit from increased energy access with the investors, financiers and innovative project developers who have the resources to build power projects throughout the continent.”

About this time last year, the IFC-World Bank’s Lighting Africa Program projected that Africa will become the world’s largest market for clean off-grid lamps, with up to 140 million people having access to better lighting by 2015. The market for quality off-grid lighting products in Africa has seen a 300 percent growth in sales since 2009, the report noted.

That sort of demand is making business models like KARIBU Solar’s possible. The startup, described by Meaghan Cassidy, KARIBU’s vice president of operations, is focused on the shopkeeper’s (AKA: entrepreneur’s) motivation to sell the charging services behind the lamp, not just the lamp itself. It’s a modified razor and blades business model.

Those are just two examples from this week’s series, which connected to numerous trendlines. As the African power sector continues to emerge as a viable market and investment opportunity, we’re confident that there will be plenty more to come, and we look forward to bringing them to you.

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off-grid energy, solar