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Africa: From Kerosene to Solar
AfricaFocus Bulletin
August 18, 2014 (140818)
(Reposted from sources cited below)
Editor's Note
The largest marketer of solar lamps in Africa, which recently passed
the one million mark in lamps sold, has set an ambitious target for
the industry. ""Our mission is to eradicate the kerosene lamp from
Africa by the end of this decade," proclaims Solar Aid. Although
achieving this goal would require the pico-solar market to emulate
mobile phone industry's exponential growth path, it may not be as
utopian as it sounds. According to market research company Navigant
Research, "Off-grid solar lighting for base of the pyramid (BOP)
markets, the leading solar PV consumer product segment, is
transitioning from a humanitarian aspiration to big business."
Although Solar Aid's business affiliate Sunny Money now only operates
in four countries, other companies are entering the market.
Continuing drops in cost point to rapidly expanding growth in both
solar lamps and somewhat larger home solar systems. In India, newly
elected Prime Minister Narendra Modi has made a similar pledge to
have at least one solar light in every home by 2019
(http://tinyurl.com/lbzvnp9).
In developed countries as well, rapidly expanding mobile solar
technology is gaining increased investor interest, with a recently
announced purchase of start-up Goal Zero by NRG Energy, a leading
U.S. independent power producers (http://tinyurl.com/m775l75).
This AfricaFocus Bulletin contains an article by Justin Guay of the
Sierra Club on off-grid energy priorities, written just before the
U.S.-Africa Leaders Summit in Washington, as well as two press
releases from the new Kenyan solar power marketing site M-KOPA, which
provides mobile credit for paying off a small home system in less
than a year.
For a previous AfricaFocus Bulletin on this topic, see
http://www.africafocus.org/docs14/ces1406.php
For talking points and links to earlier AfricaFocus Bulletins on
climate change and the environment, visit
http://www.africafocus.org/intro-env.php
Other useful background resources can be found at the following
links:
Impact Report on Switching to Solar
http://www.solar-aid.org/impact/
Largest marketer of solar lights in Africa
http://www.sunnymoney.org/
"Our mission is to eradicate the kerosene lamp from Africa by the end
of this decade."
Solar for Africa Blog
http://johnkeane1.wordpress.com/
M-KOPA Solar (includes list of dealers in Kenya)
http://www.m-kopa.com/
Review of M-KOPA in Wired magazine
http://www.wired.com/2013/10/mkopa-solar-charging/
"Solar powered lighting market is expanding rapidly, report finds"
Navigant Research, May 27, 2014
http://tinyurl.com/pwq5q4k
Notably, the trend towards dropping prices and increased
competitiveness for solar power continues in the United States as
well, as noted in a recent article and in the recently updated
"National Solar Jobs Census."
Emily Schwartz Greco and William A. Collins"Solar Power Gets Hot,
Hot, Hot," Alternet, August 13, 2014
http://www.alternet.org / direct URL: http://tinyurl.com/mgerg92
National Solar Jobs Census
http://www.thesolarfoundation.org
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On another topic, but timely and sober analysis:
Adam Levine, Five Myths on Ebola Debunked, August 13, 2014
http://tinyurl.com/lt3fnfw
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AfricaFocus Break from Publication
AfricaFocus Bulletin will be taking a break from publication for the
rest of August and early September. Automated news feeds on the
website (http://www.africafocus.org) will continue to be updated
regularly. AfricaFocus social media will also be updated occasionally
during this period. Publication of the Bulletin will resume in mid-September.
++++++++++++++++++++++end editor's note+++++++++++++++++
Four Things The U.S.-Africa Leaders Summit Can Do For Beyond the Grid
Solar
by Justin Guay, Sierra Club
August 1, 2014
Huffington Post
http://huff.to/1s9WgcH
All eyes will be on the U.S.-Africa Leaders Summit in Washington next
week with one question in mind -- will those gathered take steps to
move investment beyond the grid?
Just this week, Politico reported that former New York City Mayor
Michael Bloomberg and former President Clinton are set to attend.
With a long list of U.S. Government dignitaries also expected, the
event will send an important signal for the future of President
Obama's Power Africa Initiative. Now's the time for that signal to be
loud and clear - Power Africa is doubling down on investment in solar
markets beyond the grid.
Earlier this summer, Energy Secretary Ernest Moniz announced at an
event in Addis Ababa Ethiopia, a groundbreaking new $1 billion
initiative as a part of Power Africa dubbed "Beyond the Grid." The
initiative builds on more than 25 small-scale energy projects already
in the Power Africa pipeline to catalyze a distributed clean energy
deployment. To build the initiative and drum up investment, the
Administration pulled together 27 founding partners - including
impact investors, venture philanthropists, clean-energy enterprises,
and practitioners - who have committed to invest over $1 billion over
the next five years to seed and scale distributed energy solutions
for millions of African homes, businesses, schools, and other public
facilities.
That announcement was a big deal. By shifting policy focus and
investment towards the cheapest, fastest, most effective energy
access solutions - distributed off-grid solar - the Obama
administration is poised to unlock between a $12 billion and $50
billion clean energy opportunity.
Underneath those numbers lies an even more exciting idea -- that
energy access can develop just like communications have. All across
the developing world -- but especially in Africa -- mobile phone
technology has leapfrogged land line telephones entirely. In fact,
three out of every four new mobile phone subscribers are now in the
developing world. The same cannot be said of energy access.
Research from Group Speciale Mobile Association (GSMA) shows how both
energy and water access lag far behind the penetration of cell phones
in Africa. In total, 411 million people worldwide, the vast majority
in sub-Saharan Africa, have a mobile phone but no way to charge it.
It's this convergence of un-electrified populations and mobile phones
that is creating a tremendous new opportunity for solar power.
All across Africa, solar entrepreneurs are working with communities
who live beyond the grid to put power directly into their hands.
Thanks to the explosion of cell phones, these communities are now
able to take advantage of mobile money platforms like M-Pesa in Kenya
to pay for solar energy from companies like M-Kopa. This is unlocking
a solar revolution for energy poverty that could fundamentally alter
the evolution of energy infrastructure across the continent.
But while this market is growing rapidly -- 77 percent in 2014
according to the Global Off Grid Lighting Association -- it's cashstarved
and needs support. That's why the industry has been demanding
a new $500 million fund from the World Bank (join them and sign our
petition at http://tinyurl.com/lv3ky3r). Here are a few steps the
summit can take to further back this vital industry:
- Announce a goal to phase out kerosene based lighting by replacing
it with clean solar power;
- Leverage investments in solar that help achieve that goal by using
loan guarantee authority at USAID or OPIC;
- Work to reduce and eliminate harmful VAT taxes on solar products
for the off-grid rural populations; and
- Set a baseline and measure progress in increasing public
investment in beyond the grid solar markets.
The President's new Power Africa Initiative and the Energize Africa
Act in Congress both touch on these important goals. That's why they
now represent historic opportunities to shift resources and
investment beyond a failing business-as-usual approach towards 21st
century solutions. As the world's biggest leaders come to town for
the U.S.-Africa Leaders Summit, the innovative companies and
investors building a future we all want to see will be waiting to
hear one message: It's time to move investment Beyond the Grid.
M-KOPA in the News - Press Releases
http://www.m-kopa.com/media/latest-news/
April 7th 2014
M-KOPA Solar Scoops Bloomberg New Energy Finance Award
Kenyan company is one of ten companies globally being recognized in
2014 as a game-changer in clean energy technology and innovation
Nairobi, Kenya - M-KOPA Solar has been recognized as a new energy
pioneer at the Bloomberg New Energy Finance Summit, held in New York
on Monday 7th April 2014. This award recognizes companies that have
innovative technologies, robust business models, momentum in their
activities and the potential for global scale.
M-KOPA Solar brings together asset financing, mobile technology and
solar innovation to connect off grid, low-income homes to energy.
Customers buy a solar home system on a mobile payment plan, with an
initial US$35 (Ksh 2,999) deposit, followed by 360 daily payments of
US$0.58 (Ksh 50).
Mr. Jesse Moore, Co-Founder and Managing Director, M-KOPA Solar says,
"We're delighted to be recognized as a new energy pioneer. We
dedicate this to our 60,000 pioneering customers in Kenya and Uganda.
By connecting to M-KOPA Solar they are investing in a better,
healthier, brighter future for their family. This award is made
possible by the hard work of the M-KOPA Solar staff and agents, as
well as our fantastic partners and investors."
M-KOPA Solar systems are sold in partnership with Kenya's leading
mobile operator, Safaricom and the customer payment plan is offered
through Safaricom's mobile money platform, M-PESA.
Mr. Bob Collymore, CEO, Safaricom Limited says, "M-KOPA Solar is an
innovative and relevant solution that is solving a real problem for
thousands of rural homes. The majority of Kenyan homes are off grid -
and are spending US$200 (Ksh 17,000) on dirty and dangerous kerosene
each year. M-KOPA Solar offers a cleaner, better alternative for the
same daily expenditure. At Safaricom, we are proud that M-PESA is the
medium used to access and pay for these transformative devices."
"We are aiming to power up one million homes across Kenya by 2018.
And together we're going to focus our innovation on products and
services such as M-KOPA Solar, which positively impact on current and
future generations." adds Mr. Collymore.
The proprietary, patented technology platform that supports the
company's daily operations is called M-KOPAnet. It connects the
embedded SIM card, engineered in each solar system, with the mobile
money platform. And it manages each system's performance, disabling
it if payments are missed and reactivating it when customers catch
up.
Mr. Moore says, "The technology behind M-KOPAnet is groundbreaking
and enables low-income households to use mobile money and mobile
technology to access services that were previously inaccessible to
them, whether that was due to geography or finances. We're proud to
be a Kenyan company that is producing award-winning technology that
can be used on a global scale."
The Bloomberg awards program, now in its fifth year, selects ten New
Energy Pioneers each year. This year the independent panel of
industry experts selected the winners from numerous applicants from
around the world, assessing them against three criteria: innovation,
demonstrated momentum and potential global scale.
Michael Wilshire, Selection Committee Chair and Head of Analysis of
Bloomberg New Energy Finance, said: "We were impressed by the
strength and breadth of innovation in this year's New Energy Pioneer
candidates and their potential to accelerate the next wave of
industry growth."
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February 6th 2014
M-KOPA Update
M-KOPA Solar Brightens Off Grid Solar Market
- Reaches 50,000 customers within 15 months of launch
- Closes US$ 20 million in funding to reach one million homes
Nairobi, Kenya - M-KOPA Solar is today announcing that it has closed
its most recent round of funding, raising US$ 20 million (Ksh 1.72
Bn) to fund expansion of their customer base from 50,000 homes to one
million homes by 2018. M-KOPA Solar is an innovative asset financing
company that sells solar home systems to off grid households, on an
affordable 12-month mobile money payment plan.
The funding includes a US$ 10 million (Ksh 860 million) commercialgrade
syndicated debt facility fronted by a leading East African
bank, Commercial Bank of Africa (CBA). The system is sold in
partnership with the Safaricom dealer network, and the consumer
payment plan is offered through Safaricom's mobile money platform, M-
PESA.
Mr. Jesse Moore, Co-Founder and Managing Director, M-KOPA Solar says,
"The M-KOPA Solar model makes world class solar systems affordable
for low income consumers - most of whom live below the poverty line.
It's a model that is also proving attractive to investors. At the
heart of our business is our patented technology platform that
combines embedded GSM with mobile payments to revolutionise asset
financing.
"We know Kenyans spend over US$ 1 billion (Ksh 86 billion) a year on
kerosene. We also know Kenyans would prefer brighter, healthier and
safer alternatives. We've developed our technology and business model
precisely to meet that consumer need."
The collateral for the CBA-led loan is M-KOPA Solar's future cash
flows from its customer payment plans. This innovative lending
structure involves the securitisation of a loan book composed of lowincome
consumers, sometimes without bank accounts or fixed abode,
paid entirely through the Safaricom M-PESA system. This is different
to most collateral packages that are backed up by assets - like land.
Mr. Jeremy Ngunze, CEO at CBA says, "As a group, we understand the
aspirations and realities of African economies and this investment in
M-KOPA Solar makes sound business sense for us.
"There is very little formal credit or financial information on how
off grid households consume and pay for energy. We're very impressed
with M-KOPA Solar's technology platform, which allows them to extend
credit to customers who are otherwise lacking formal collateral or
credit histories. And it is clear that there is an enormous,
creditable market that wants to be empowered by cutting-edge energy,
telecommunications and financial solutions."
Other lenders in M-KOPA Solar's debt facility are Bill & Melinda
Gates Foundation, LGT Venture Philanthropy, Imprint Capital, and
Netri Foundation. The US$ 20 million in funding includes grants from
DFID UK, Bill & Melinda Gates Foundation and the Shell Foundation.
And there is re-investment by lead equity investors Gray Ghost
Ventures. Funds are being used to scale up sales and operations in
East Africa, expansion into other markets, R&D and business
intelligence.
Mr. Bob Collymore, CEO, Safaricom Limited says, "We're incredibly
proud to have been an anchor partner for M-KOPA Solar and to see this
Kenyan success story starting to go global. Our technology, fantastic
customers and dealer network have provided a unique environment to
scale up the M-KOPA Solar model."
"Every day there are people coming into our shops looking to
revolutionise their access to energy by acquiring M-KOPA Solar. And
each day we're seeing more and more people successfully complete
their M-PESA payment programmes. By providing this service, we are
not just lighting homes, but we are also enabling children to do
their homework at night as well as providing convenient unlimited
mobile charging at home."
M-KOPA Solar currently offers customers a high quality d.light D20G
solar system with three lights, phone charging and a solar powered
radio - which is all backed by a two-year warranty. The system is
available for a deposit of Ksh 2999 (US$ 35) followed by 360 daily
payments of Ksh 50 (US$ 0.58, inclusive of VAT).
Repayment rates on the M-KOPA Solar payment package are at 95 per
cent even though most households have per capita incomes below US$ 2
per day. A recent independent survey, by TNS Research International
Kenya, reported that 97 per cent of households with M-KOPA Solar were
saving money compared to their previous daily spend on kerosene.
Mr. Moore says, "Our investors and customers appreciate that M-KOPA
Solar can do well as a business and change lives at the same time."
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with a
particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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