By Nuru Ahmed
As coronavirus pandemic continues, the global economy has sparked fears for the emerging off-grid clean energy businesses serving poor customers in Africa and Asia – but in northern Kenya’s Kalobeyei refugee settlement, the lights are staying on.
U.S-based firm Renewvia Energy is running two solar mini-grids in the area, providing power to 600 households of refugees mainly from South Sudan and the local host community, including businesses, churches, schools and health facilities.
Backed by donor funding from Britain and Germany, the mini-grids are part of a wider push by the Kenyan government to provide all its citizens with modern, affordable and reliable energy by 2022 – eight years ahead of a global deadline.
Renewvia, which operates 11 mini-grids in sub-Saharan Africa, secured the investment it needed for 10 more projects in Kenya and Nigeria in February, right before the coronavirus crisis hit, and plans to push ahead with them.
Its founder and CEO, Trey Jarrard believes the pandemic will be “a blip for this sector”, because electric power is needed to advance other areas of economic development, from health to education and gender equality.
“I think the demand is there,” he said, “We haven’t seen much of a difference in terms of how much energy we’re selling in the communities we’re serving right now.”
Nearly 550 million Africans without electric power already spend money on dirty energy sources such as kerosene and diesel, or cut down forests for fuel.
Buying power from a solar mini-grid operator would save them both cash and time, Jarrard added.
Energy access specialists said the COVID-19 pandemic had demonstrated a hunger for electricity in rural communities to keep health centres functioning, children learning or televisions on for information, especially as workers who lost jobs in cities headed home.
Leslie Labruto, the Head of Global Energy for Acumen a nonprofit firm investing in innovations to tackle poverty said, “People are seeing it is an essential service and are willing to pay for it in a crisis.”
She pointed to the rapid growth of the off-grid clean energy sector in developing countries, where it has expanded into a market worth about $1.75 billion over the past decade, providing power to 470 million people as well as about 370,000 jobs, many with small, local companies.
But that growth rate and investment remain too low to reach Sustainable Development Goal 7 (SDG7) to provide clean power to all, including the poorest, by 2030.
Now measures to curb the pandemic, including lockdowns, curfews and their economic fallout, have created more challenges for hundreds of firms providing off-grid power.
“We can’t afford to see no sector in a couple of months when companies have gone bankrupt,” said Labruto. “We need these companies to achieve SDG 7.”
Back in March, Acumen began convening companies, investors and industry associations to try to set up a fund to limit the damage if the pandemic meant customers could not pay for energy services, supply chains stalled and investment flows dried up.
The relief fund is set to launch in July, offering energy access companies in Africa and Asia, cheap loans for up to three years to maintain existing services and retain the staff they need to expand in future.
“The point of this is to preserve jobs,” said Labruto, adding that nearly 500 companies from 40 countries had registered early interest in applying to the fund.
Investors have also responded well, she said. The debt fund hopes to attract close to half its $100-million target by July, helped by grants from Sweden’s Development Agency and several philanthropic foundations, which will be used to reduce risk.
The fund aims to provide capital to at least 70 companies, Labruto said, adding it would not be suitable for bailing out smaller firms as they would struggle to pay back loans.
In an open letter, major off-grid energy organisations appealed last month to donors, foundations and others for an extra $25 million in grants “to avoid the most severe impacts – including the bankruptcy of energy access companies, halting progress of the SDGs and leaving communities in the dark”.
The Green Climate Fund, one of the biggest sources of international climate finance for developing countries, confirmed it was considering putting money into the Acumen-led energy access relief fund.
It is exploring options to support small and medium-sized companies (SMEs) working on renewable energy “to remain financially solvent, going concerns at a time when businesses are facing significant liquidity constraints due to COVID-19”.
“This will ensure that SMEs with robust business models can continue to generate climate benefits in developing countries,” a Green Climate Fund spokeswoman.